HOW TO PERFORM AS A CRYPTOCURRENCY EXCHANGE OPERATOR
Many companies that want to expand their business and start transacting in cryptocurrencies, for example, by adding crypto to their service line, always face serious challenges on the legislative level. The same restrictions apply to the traditional banking system. Most banks cannot work with cryptocurrencies by themselves or provide financial services to companies involved in cryptocurrency business because, within their jurisdiction, activities involving digital financial assets (cryptocurrencies) are not regulated at the legislative level.
Currently, there are only 14 countries in the world, including Belarus, where cryptocurrency activity is regulated in one way or the other. Belarus was one of the first countries to give legal status to tokens, cryptocurrencies and blockchain technologies. The following activities are legalized in Belarus:
- Placement of tokenized assets;
- ICO and other ways of raising funds through blockchain technologies;
- Transactions with tokens (purchase, sale, storage, exchange, mining);
- Exchange and instant exchange services.
Doing the cryptocurrency business in Belarus gives different types of businesses obvious advantages that we previously described in the article "Advantages of doing crypto business in Belarus". Now we`ll uncover the main steps a bank needs to make to perform as a cryptocurrency exchange operator.
1. Registration of new business entity in Belarus
Chief among the stages is to register as a resident of special economic zone “High Technologies Park”. The HTP provides a favorable tax and legal system for the IT and other businesses.
Domestic and foreign investors have equal legal rights when registering a company in Belarus. At the first stage, some standard procedures are carried out, among which are: determining the legal form, approving the name of the future company and registering it in the Unified State Register of Legal Entities and Individual Entrepreneurs.
2. Opening bank account
A second step is to open a bank account with the authorized capital of at least US $970,000. After becoming a resident of the High Technologies Park, foreign investors can open and run foreign bank accounts without the permission of the National Bank of Belarus.
The key staff according to regulatory requirements should include the following people: director, chief accountant, risk manager, CFT/AML Compliance officer, Cybercity officer, system administrator and a person that would ensure compliance with the HTP regimes.
4. Drafting of local laws and regulations defining the procedure for handling conflicts of interest arising in the activity of the cryptocurrency exchange operator
5. Drafting of client agreements
6. Network technical audit
7. Big Four audit (PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, KPMG)
8. Drafting of a business project and needed documents for submission to the HTP
9. Registration in HTP as a cryptocurrency exchange office operator (signing a contract with the HTP)
10. Project kick-off
Implementation of cryptocurrency activities includes not only legal and legislative aspects but also the technological solution itself. Banks would need to develop and deploy a complete system to add a cryptocurrency exchange services to their bank service line. The choice of contractors in this situation is not limited to the country, but rather to expertise in the blockchain industry and this specific domain. Some companies have a command of crypto exchange technology and can offer such cryptocurrency software development services. But here at Cotlex, we have an out-of-the-box solution that complies with all legislative rules and terms of operation in the financial market.
Cotlex cryptocurrency instant exchange solution enables banking institutions to expand their operations with safety and quality guaranteed for their customers. The final cryptocurrency exchange product enables customers to instantly trade (buy and sell) cryptocurrencies for fiat money at current rates. The system is designed to meet the most stringent requirements for cryptocurrency exchange, such as user identification and verification requirements and compliance with the FATF anti-money laundering policy, which are all collected in the Decree No. 8 of the Belarusian legislation.
Having Cotlex as a technology partner considerably simplifies and accelerates the process of launching a crypto exchange project. Not to say that the cryptocurrency legal regime in Belarus opens up opportunities for companies from different industries, especially from fintech.