Regulation of the cryptocurrency market is constantly becoming stricter. Nowadays jurisdictions impose high regulatory and risk management requirements on virtual asset service providers.
Despite this, we always manage to find a solution that suits the client. All the time our team provides research of the market and regulations on various markets to find the best jurisdiction. Recently we have made the global overview of the VASP regulation in EEA and ready to share information with our future and existing clients. Today we will look at the features of obtaining a cryptocurrency license in the Czech Republic.
Tax Summary:
- Personal income tax – to CZK 1 935 552 (~ EUR 76 551) – 15%; over CZK 1 935 552 – 23%
- Corporate income tax – 19%
What law/s governs VASP activities?
- Zákon č. 253/2008 Sb., o některých opatřeních proti legalizaci výnosů z trestné činnosti a financování terorismu, ve znění účinném od 1. srpna 2023 / (AML law)
- Vyhláška ČNB č. 67/2018 Sb., o některých požadavcích na systém vnitřních zásad, postupů a kontrolních opatření proti legalizaci výnosů z trestné činnosti a financování terorismu – ve znění účinném od 1. 7. 2021
- Systém vnitřních zásad, postupů a kontrolních opatření k naplnění povinností stanovených zákonem č. 253/2008 sb
- Zákon o živnostenském podnikání
What activities are included in VASP services?
The status of an obliged person pursuant to Section 2(1)(l) and Section 4(8) of the AML law, i.e. a person providing services related to a virtual asset, is based, inter alia, on the following activities:
- Buying, selling or holding a virtual asset.
- Managing or transferring a virtual asset for another.
- Arranging the purchase or sale of a virtual asset.
- Providing a financial service relating to the offer or sale of a virtual asset.
- The provision of any other similar service related to a virtual asset.
Who is the VASP regulator?
- Finanční analytický úřad (“FAÚ“)
What is the procedure for registering a VASP for a local company?
As there is no specific crypto license in the Czech Republic, companies planning to engage in economic activities related to cryptocurrencies must follow the general authorization procedures stipulated by the Trade Licensing Register.
To get the license and operate in Czech Republic as a VASP, some compulsory requirements must be met:
- Registration as a legal entity, opening a physical office and sharing capital (minimum 1 CZK for limited liability companies (S.R.O.)).
- Documentation must be prepared by the requirements of the regulator as well as the acquiring bank where the account will be opened.
- Provide jobs for official staff members and directors with experience and education in financial activities.
- Develop a business plan and a description of the software and hardware (with translation into Czech).
- Draw up AML/KYC policies, risk control, and monitoring rules.
- Submit a package of documents to the regulatory body.
- Pay the state fee.
- Owners and directors of the company must have an impeccable reputation and no criminal record.
- At least two managers in the company.
All the communication and reporting for FAU is processed in Czech language, it is important to have a local person as the MLRO.
Is there any specific authorization required for a VASP from another EU member state to provide services in this jurisdiction?
According to subsection 2, section 5 of the Trade Licensing Act, a legal entity that does not have its registered office in the territory of the Czech Republic, may, on the territory of the Czech Republic, to operate a business under the same conditions and to the same extent as a Czech person, unless something else follows from this or a special law.
Other provisions of this act allow for the confirmation of competence without the need to obtain a trade license only for individuals. Thus, legal entities from other EU member states will be required to obtain a trade license to carry out VASP activities.
What is the liability for the activities of a VASP from another EU member state without local registration/authorization in this jurisdiction?
In § 35 (12) of AML law only stated the following:
“When checking the fulfillment of the obligations set out in the Law by providers of services related to virtual assets, the FAU shall also check whether the obliged person is authorized to operate a free trade and whether it has declared the field of activity subject to mandatory declaration under the Trade Licensing Act”.
Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.
