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Set up a Czech Cryptocurrency Company
Updated on Monday 11th July 2022 Rate this article
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Investors who want to open a cryptocurrency company in Czech Republic are required to follow the regulations that were created for this type of businesses. Our team of agents in company formation in Czech Republic can provide assistance for the registration of a business that uses cryptocurrency (Bitcoin) transactions.
Currently, the country’s capital city, Prague, is one of the locations with the highest density of cryptocurrency ATMs (in Bitcoin). The city has a very well developed infrastructure for cryptocurrency users. Prague was the first city that opened a coffee shop where clients could pay only in Bitcoin.
Cryptocurrency regulations in Czech Republic
The cryptocurrency industry in Czech Republic was not regulated by the local authorities until recently, but the Czech government created a legal framework for such activities at the beginning of 2017, imposing new rules for the service providers operating in this country. We mention a few of them, if you want to open a cryptocurrency company in Czech Republic:
- • Businessmen who want to open a cryptocurrency company in Czech Republic must know that the Finance Ministry requires such companies to determine the identity of the users.
- • Cryptocurrency companies need to comply to a set of additional regulations. These are required to register with the Trade Licensing Authority. Provided that the company did not conclude all the necessary steps (and in due time) in order to obtain the crypto exchange license in Czech Republic, the institution is allowed to apply a fine of up to CZK 500,000.
- • The Czech Republic is a member state of the European Union (EU), which considers that cryptocurrencies are not seen, from a legal point of view, as currency.
- • The local authorities do impose specific regulations that fall under the scope of the Anti-Money Laundering Law.
Anti-money laundering rules in Czech Republic
Cryptocurrency businesses operating in this country have to comply with the rules prescribed under the Czech Anti-Money Laundering Act (Act No. 253/2008 Coll.), which defines what a cryptocurrency is and the types of entities that use cryptocurrencies. At a European level, EU member states must enact in their national laws the EU's Fifth Anti-Money Laundering Directive, which stipulates the specific types of cryptocurrency activities that must fall under the scope of this law.
However, the Czech authorities plan to regulate the activity of any cryptocurrency-related company and this is why those interested in starting the procedure of company formation in Czech Republic should verify the current requirements (including the licensing requirements); our team of specialists in Czech company formation can provide in-depth details about how to open a cryptocurrency company in Czech Republic.
Statistics on cryptocurrencies
The usage of cryptocurrency became a popular event not only in Czech Republic, but also at a global level. Countries across the world started creating a legal environment that can secure cryptocurrency transactions, as it was the case of Czech Republic. Businessmen or natural persons who want to invest in cryptocurrency in Czech Republic or elsewhere should know the following:
- • Bitcoin is the most popular cryptocurrency, which appeared in 2009.
- • The average daily transactions concluded in Bitcoin account for $6 billion (EUR 5,3 billion).
- • The first purchase that was made using cryptocurrency was recorded in May 2010.
- • In August 2015, the first initial coin offering (ICO) took place, a method through which one could raise capital by using cryptocurrencies.
- • At the level of April 2022 there were 153 million Bitcoin users across the world.
Why invest in the Czech cryptocurrency market?
Considering that there are numerous reputable jurisdictions for starting a cryptocurrency business, as an investor, it is difficult to decide on a particular country. With regards to choosing Czech Republic as a cryptocurrency business destination, investors should take a set of factors into consideration. For instance, using Bitcoin for cryptocurrency transactions is completely legal.
The cryptocurrency can also be used as a means for raising capital for a start-up company. This can be done through ICOs, as mentioned above, which represents a crowdfunding method. Czech Republic has 42 ICOs and the Czech residents can easily participate in such procedures. At a global level, Czech Republic provides one of the most attractive markets for investing in the cryptocurrency sector, ranking as 6th jurisdiction in a list containing 249 countries.
Issuance of a crypto exchange license in the Czech Republic
The process of obtaining a crypto exchange license in Czech Republic is quite simple. A cryptocurrency company must have this license if it wants to operate in the market, otherwise, the authorities may consider that they are involved in virtual currency fraud. To get an idea of the formalities for obtaining a crypto exchange license in Czech Republic, we present below some of them:
- In the first line, a legal entity must be registered. The most popular structure for this type of activity is a limited liability company.
- A business plan must be submitted that contains details about the business, as well as the type of platform or software used. Czech translation is required for this document.
- Authorities are demanding a clear criminal record in order to apply for a crypto exchange license in Czech Republic.
- Information is required regarding the non-cash bank account for virtual currency transactions.
- If you want to hire staff, you need to make sure that they have the necessary experience in the field.
- Security and data protection policies will be prepared for customers.
- It is also necessary to prove, with the help of a standard document, that you have understood the anti-money laundering regulation that is required in the field of cryptocurrency.
- A specific fee needs to be paid before the submission of documents.
If you manage to prepare the above-mentioned documents, you will successfully obtain a crypto exchange license in Czech Republic. But to make sure you don't get hit by a possible rejection, we recommend that you get in touch with our local specialists.
What is Small Payment Institution?
A Small Payment Institution or SMI is a type of license required to open a cryptocurrency company in Czech Republic. This type of license allows the creation of merchant clarifications and processing developments, fiat and non-fiat funds exchange, and even the opening of accounts for clients. Such a crypto exchange license in the Czech Republic is suitable for those who want to operate in this sector as soon as possible with their business.
Recent government issues related to cryptocurrency
The Czech government has recently published several additions to virtual currency legislation. Thus, the categorization of cryptocurrencies, in the same way, was proposed. This presupposes that, regardless of the purpose or function of the virtual currency, the cryptocurrencies are grouped. Companies are also advised to have comprehensive information about the cryptocurrencies offered. This includes companies that offer Bitcoin and those that trade on cryptocurrency exchanges.
Moreover, cryptocurrency mining companies that use cryptocurrencies for commercial purposes must prove a crypto exchange license in Czech Republic and pay taxes to the Social and Health Fund. And because mining operations are considered commercial activities, they are subject to a 19% tax.
So, if you want to better understand the legislation for virtual currency in the Czech Republic, we invite you to talk to our company formation agents in the Czech republic. Our team has experience in this field and can help you if you want to open a cryptocurrency company in Czech Republic.
Know Your Customer (KYC) procedures in Czech Republic
Companies that accept Bitcoin transactions in Czech Republic will be required to apply the Know Your Customer (KYC) procedures for transactions with a value above EUR 1,000. In this sense, the procedure of company formation in Czech Republic for cryptocurrency businesses will impose merchants to request information on their clients, such as: identity card, gender, nationality and address.
Moreover, cryptocurrency businesses may also be imposed with the value added tax in the near future, following the European Commission’s regulations related to money laundering activities and criminal financing that can be associated with this type of payment.
Businessmen are invited to contact our team of consultants for further details about how to open a cryptocurrency company in Czech Republic. We can also help them apply for a crypto exchange license in Czech Republic by handling all the formalities.
Meet us in Brno
Call us at +420 721 565 868 to set up an appointment with our specialists in company formation in Brno. Alternatively you can incorporate your company without traveling to Czech Republic.
As an CorpexLab client, you will benefit from the joint expertize of local experts and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Czech Republic.
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