Top 4 Must-have Licenses for Cryptocurrency Exchanges in the US
Of late, relevant regulatory agencies have imposed stringent rules on cryptocurrency and blockchain firms operating in the United States. Mostly, the law requires such businesses to acquire a number of licenses before rolling out their operations. The following are the four most vital licenses that crypto platforms are expected to have. Notably, all of them are compulsory, depending on the status of the company at hand. The lenses are ranked in a descending order, with the first one being the most prevalent.
Money Transmitter License
This is the most common license that is required of cryptocurrency trading platforms. Since they hold client funds and facilitates the trade of crypto assets, digital exchanges are deemed as money transmitters.
A significant number of the states in the US have their own Money Transmitter License, meaning that companies that wish to operate across the country have to comply with the stipulations if each region separately. A quick glance at the list of licenses held by Coinbase reveals that the platform holds several transmitter licenses from various states.
Virtual Currency License
The Virtual Currency License is an oddity in the cryptocurrency sector, mainly because it is only relevant in New York, a city known for its unfriendly stance on digital currencies. As expected, companies have to meet overly strict requirements before applying for this document. Moreover, there is no guarantee that the application will be approved. This probably explains the low number of companies that hold this license.
Upon obtaining this document, firms are permitted to conduct crypto trading activities within New York. Nonetheless, many crypto companies are avoiding the New York market due to the unfavorable nature of its regulations.
Seller Of Payment Instruments License
The state of Georgia has a distinctive set of crypto regulations. All exchange platforms are required to hold a Selling Payment Instruments license, a document that enables them to trade in both fiat and digital currencies. Expectedly, this license remains valid for a specific period, after which it must be renewed.
Sale Of Checks License
The Sled of Checks license is probably the most peculiarly named license concerning digital asset exchanges. This document enables firms to sale checks, money orders, drafts, and other tools that facilitate the transfer of money. Initially, this license was issued in Alabama. However, Delaware and Rhode Island have recently introduced licenses that are closely related to the Alabama version.