Since the launch of cryptocurrencies like Bitcoin way back in 2009, several crypto exchanges are making their way to the limelight, offering crypto traders and users robust platforms to invest and reap copious rewards. But at the same time, legal regulations and statutes have always been breathing down their necks. Don’t get us wrong; legal consultants are vital and imperative to launching and successfully running a crypto exchange. That is exactly why we are offering a slew of features and functionalities that you, as a well-established crypto exchange or an entrepreneur making your way in the complex tangle of the cryptocurrency world, can make use of.
Cryptocurrency Exchange Legal Consultants – Why Do We Need Them?
This is probably not a shock to many, but if you’ve been living under a rock, then yes. Regulation of crypto exchanges is a crucial part of running an exchange because developing, launching, and obtaining a license to run a crypto exchange involves a lot of complexities. Not just for exchanges but also for STO, ICO, IDO, and DeFi projects. Understanding the legal complexities, underlying securities and commodities, anti-money laundering regulations, corporate and taxation laws in every country is crucial.
One of the reasons why such extensive and far-reaching efforts have to occur is the drawbacks within the original mission of the crypto project. This is often coupled with the lack of regulatory and legal aspects. Some of these drawbacks include –
- Incompetent technical skills of the exchange developers
- Lack of comprehension of cryptocurrency and blockchain
- Ineffectual and fake advisers
- Empty and counterfeit promises
Any eager businessman who wants to start a crypto exchange, no matter how much investment he puts into it, will usually stumble into one of the above-mentioned drawbacks. To avoid this, crypto legal services are mandatory.
According to the international organization of security commissions’ report, Initial Coin Offerings and its counterparts come with a string of risks. And since platform users put in a lot of capital into these cryptocurrency investment protocols, understanding and following regulatory decrees have become mandatory.
What Are The Various Cryptocurrency Legalities And Regulations An Exchange Needs To Be Aware Of?
This section needs to be prefaced with the fact that cryptocurrency regulations and legal frameworks are constantly changing and evolving to meet the advancing needs of the community. These regulations also differ within other jurisdictions.
- Litigation and disputes – As sour as that may sound, launching a crypto exchange comes with strings attached. As a business owner, you need to be well equipped and informed to deal with resolving disputes with your platform users, business and investment frauds, breach of contract disputes, and arbitration.
- Licensing and compliance – Only a few countries are issuing licenses to crypto exchanges as of today. As a business, you must be aware that it is a complicated and time-consuming process that includes complete and thorough comprehension and preparation from the owners’ side. Adding to that, the basic implementation of AML and KYC are vital, followed by registration with FinCen (Financial Crimes Enforcement Network) and MTL (Money Transmission Licenses).
- Token sales and listing exchanges – compliance with token and coin security laws, regulatory investigations and defense, and SEC no- action relief and FinHUN engagement are the rudimentary regulations to watch out for.
As iterated earlier, the regulations and statutory to be implemented are not permanent. So have a look at some of the trends in legal regulation and guidelines –
- Countries within the South American Borders are not open to cryptocurrency and its entailing projects. This closed stance also extends to blockchain-related protocols.
- Sweden is the only country that has accepted cryptocurrency as a fiat currency
- Canada, the USA, and Japan have favorable legislation towards cryptocurrency
- In China, only private individuals can hold and use Bitcoins according to their legislative rules
- MAS – The Monetary Association of Singapore has taken a rather soft approach to crypto exchange regulations. They have a friendly approach to trading cryptos in comparison to their regional neighbours
- Another country that is fairly progressive with the integration of cryptocurrency regulations is the island nation of Australia. Exchanges are legal to operate within the nation, although they keep updating their regulations
Does Decentralized Finance (Defi) Fall Into Prevailing Regulations And Legal Requirements?
Currently, DeFi is operating within the “grey area” of the financial industry, following an unspoken code of conduct that seems to be working in their favour. However, the devious eyes of regulators are scanning the DeFi landscape for errors even though the DeFi market seems to be highly regulated. Take a look at the following considerations within the DeFi space that might fall under legal scrutiny –
- Whether the developers of smart contracts come are liable
- Towards governance proceedings and their regulators
In terms of the legal protection of smart contracts and their entailing functions, regulations and legal entities only have limited protection. The DeFi platform owners will have to pay their part by being alert and diligent toward the development and design of smart contracts.
Blockchain App Factory’s Crypto Exchange Legal Consultancy Services
If you’ve read this far, you would have a clear picture of what encompasses the legalisation of crypto exchanges. We understand that it can be a tangled mess of legal jargon that is not always easy to comprehend. That’s why we offer our expert services, which include blockchain engineers, legal consultants, and cryptocurrency connoisseurs who will help you navigate your way to legalise and license your crypto exchange.
Our wide range of services include –
- Establishing a legal entity
- Drafting legal documentation
- Setting up AML and KYC
- Provide ongoing legal support
- Provide advice on crypto regulatory matters
- Advise on integrating blockchain technology into existing business models
With our ample understanding and insight into the regulatory landscape, our licensing and legal services are the whole package deal for businesses looking to establish their crypto exchanges. All our solutions are tailor-made to meet the requirements of your company’s needs.