Legal regulation of crypto activities in the Czech Republic
In the Czech Republic, crypto activities are regulated by several legislative acts, including the Act on Certain Measures Against the Legalisation of Proceeds from Criminal Activities, the Financing of Terrorism and the Trade Licensing Act. Therefore, obtaining a licence for entrepreneurial activities related to cryptocurrency services (Virtual Assets Service Provider Licence) in the Czech Republic follows the above mentioned laws.
Notably, a company holding a VASP licence in the Czech Republic can offer its services to clients from other countries. However, if such services are provided in another European Union country (remotely, without establishing a branch), it can only be done temporarily and irregularly.
Additionally, the advantages of the Czech Republic include:
- Transparency of the tax system;
- Economic stability in a country located in the heart of Europe;
- The ability to register a company for non-residents;
- Registered capital starting from 1 CZK;
- No need for personal presence during registration.
The situation
The client approached us with a request to launch a cryptocurrency exchange with the capability to exchange fiat for cryptocurrency and vice versa. The client’s primary requirement was working with both residents and non-residents of the EU. Due to time constraints, the client requested minimal involvement in the process. Additionally, the client asked for an evaluation of the legality and feasibility of his business model.
Tasks at hand
Our task was to assist the client in choosing the most suitable jurisdiction for his requirements.
We suggested considering the Czech Republic’s developed financial infrastructure and business-friendly environment. The client agreed with our reasoning, and we began implementing the project.
Firstly, we helped the client assess the feasibility of their business model and adapted it to Czech legislation. We then prepared all the necessary documentation for registration with regulatory authorities. After registering the legal entity, we obtained the required type of licence for the client and notified the Financial Analytical Office of the Czech Republic (FAU).
Furthermore, we utilised our comprehensive document base (drafts), essential for operating a cryptocurrency exchange (user agreement, cookie policy, internal documentation, and other crucial documents), significantly speeding up the business launch process.
The result
Through our efforts, we achieved the following:
- Identified the most suitable jurisdiction for the client’s needs;
- Adapted the client’s business model to Czech legislation;
- Registered the legal entity without the client’s physical presence;
- Opened a payment account in a European bank;
- Obtained the necessary licence (fiat/crypto and vice versa);
- Prepared all necessary internal documentation and policies for the website.
In conclusion, we helped our client launch his cryptocurrency exchange in the desired format.
Our main goal is to simplify our client’s lives and help them bring their ideas to life, leveraging our knowledge of the nuances and advantages of Czech jurisdiction due to our specialists’ presence in the Czech Republic. Suppose our clients need clarification or refinement of business models.
In that case, we are ready to assist them, drawing on our extensive experience and knowledge in obtaining cryptocurrency licences in the Czech Republic, launching cryptocurrency exchanges, and providing ongoing legal, financial, and AML (anti-money laundering) support.
By Dmitry Vyalkov, LLM, Lawyer at COREDO