This article looks at the process and procedure of applying for a crypto or cryptocurrency licence in the UK, Ireland Estonia and Lithuania.
1. Obtaining the crypto licence in the UK
If you wish to provide crypto services in the UK, then you must register with the FCA for the crypto licence (AML/CTF crypto Registration). The registration is formally known as the FCA AML/CTF Cryptoasset Registration regime. The FCA is the anti-money laundering and counter-terrorist financial (AML/CTF) supervisor of crypto businesses based in the UK under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
What are crypto activities under the FCA's supervision?
Cryptocurrency exchange providers
A cryptocurrency exchange provider is a firm creating or issuing cryptoassets when providing the following services:
(a) exchanging, or arranging or making arrangements with a view to the exchange of, cryptoassets for money or money for cryptoassets,
(b) exchanging, or arranging or making arrangements with a view to the exchange of, one cryptoasset for another, or
(c) operating a machine that utilises automated processes to exchange cryptoassets for money or money for cryptoassets (Regulation 14A(1) Money Laundering Regulations).
Custodian wallet providers
A custodian wallet provider is a firm providing services to safeguard or administer:
(a) cryptoassets on behalf of its customers, or
(b) private cryptographic keys on behalf of its customers in order to hold, store and transfer cryptoassets when providing such services (Regulation 14A(2) Money Laundering Regulations).
Custodian wallet providers may also offer other services. Firms merely holding and storing cryptographic keys, but not involved in their transfer are not likely to be in the scope of the definition. This includes hardware wallet manufacturers and cloud storing service providers. These are regarded as ‘non-custodian wallet providers’.
Do you need to register your crypto business with the FCA?
Your application will be considered on a case-by-case basis. Generally, the regulations are applicable if you have a physical presence in the UK through which the cryptoasset business is conducted. However, merely having UK customers does not in itself mean that such a firm would fall within the jurisdictional scope of the ML Regulations. However, a cryptoasset exchange provider that has an ATM located in the UK will be within the scope of the ML Regulations irrespective of which jurisdiction the operator is established in or where its offices are based.
2. Obtaining the crypto licence in Ireland
In order to provide cryptocurrency services in Ireland, you must register with the Irish financial services regulator for cryptocurrency, namely, the Central Bank of Ireland, and register as a Virtual Asset Service Provider (VASP), under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 to 2021.
In order for the Central Bank of Ireland to consider and accept an application for registration from a VASP, you must complete the VASP AML/CFT Registration Form. In doing so, you must satisfy the Central Bank of Ireland that they are fully compliant with all relevant regulatory requirements under the CJA 2010 to 2021.
Law in Ireland for Cryptocurrency businesses
CJA 2010 to 2021 governs the law in Ireland on anti-money laundering and the countering of the financing of terrorism (AML/CFT) and for cryptocurrency businesses. The Central Bank of Ireland is the regulator in Ireland for the monitoring and supervision of crypto businesses and the compliance of their AML/CFT obligations under Part 4 of the CJA 2010 to 2021.
The requirement to register your cryptocurrency business in Ireland
You will be required to register with the Central Bank for your crypto business if you are providing any of the following services:
An exchange between virtual assets and fiat currencies;
Exchange between one or more forms of virtual assets;
Transfer of virtual assets, that is to say, conduct a transaction on behalf of another person that moves a virtual asset from one virtual asset address or account to another;
Custodian wallet provider;
Participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset or both.
Assessment areas for the cryptocurrency application in Ireland
The following will be assessed by the Central Bank of Ireland during the assessment of your crypto registration application:
firm details, including the proposed business activities, business model, structure and regulatory history.
details of shareholdings and senior management, including direct and indirect shareholders, partnerships, and management.
the Fitness and Probity of the beneficial owners/controllers of the firm, the firm’s principal officers, and the persons holding certain other management functions of the firm.
the firm's AML/CFT governance, including the firm’s risk assessment, policies and procedures, AML/CFT manual, AML/CFT training and report management information.
the firm's ML/TF risk profile, including the firm’s customer exposure, financial sanctions and PEPs screening, geography/country, distribution channels, and agents and branches.
the firm's risk-based approach, including the firm’s assurance testing, third party reliance, and outsourcing activities.
Key stages of the AML registration process
Submission of the Application Form to the Central Bank.
The Central Bank will issue you an email containing application information
Submission of all supporting documentation through the online system.
The Central Bank will acknowledge receipt of your application.
The Central Bank will assess whether your application contains all required information and documentation to progress to the assessment phase. They will notify you by email.
Where all the required information and documentation has been provided, the Central Bank will conduct an assessment of the registration application. Where necessary, the Central Bank will request further information and/or clarification f