A Gibraltar Crypto License enables users to establish a variety of crypto businesses, such as a crypto exchange where fiat to cryptocurrency and cryptocurrency to fiat exchange are integrated.
Under Gibraltar’s legislation, any company that is professionally performing – in, out, or from Gibraltar – DLT (Distributed Ledger Technology) services for storing or transmitting value belonging to other people needs to get authorization from the Gibraltar Financial Services Commission (GFSC).
Requirements for Getting a Crypto License in Gibraltar
The DLT structure applies to activities not subject to regulation under any other regulatory framework that utilizes DLT to transmit or store value belonging to others. Therefore, the license can be used for a variety of activities within the crypto industry, including exchanges and wallets.
The regulatory requirements are referred to as a set of principles rather than firm rules. Any crypto license applicant has to meet the following nine criteria, as per the official paper:
- Honesty and integrity;
- Maintaining adequate financial and non-financial resources;
- Paying due regard to the interests and requirements of its customers;
- Maintaining High-Security Access Protocols;
- Forward-looking Risk Management practices;
- Being flexible and having contingency plans in place for the orderly and solvent dissolution of its business;
- Effective Corporate Governance;
- Having adequate arrangements in place for the protection of applicant’s assets and money, including segregation of assets;
- Detecting and disclosing Financial Crime Risks.
The Process, Fees, and Costs
The crypto license application process starts with a pre-application engagement, where the client’s application project is reviewed, along with the client’s business model and the type of activity or service they want to provide.
The next process comprises the initial application assessment when the GFSC carries out an initial analysis of the native risks and complexity of the client’s proposed activity and business model. The point is to gain an initial understanding of the business model and to make an analysis of the complexity of the application – this part of the process usually takes around two weeks.
The following process is the full application and presentation part. When entering this stage, all the documentation needed has to be sent over to the GFSC, and the applicant is invited to hold a presentation before the GFSC committee. The presentation is deemed a complete part of the authorization process because the applicant must demonstrate how they and their activity will meet the requirements created in the guidelines.
The amount of the GFSC application fee relies on the complexity of the proposed activity – however, fees are never lower than $13,500 (£10,000), and the more complex cases may be taxed as high as $40,700 (£30,000). Usually, exchanges enter this latter category.
There is no exact timeframe for the application process because it depends on the applicant’s different proposed activity types. It is also highly recommended to have a legal expert to assist you with the application process, and the legal consultant’s fees vary according to the complexity of the application process.
The Documentation Needed to Apply for a Crypto License
The documentation required to support each application will depend on the proposed activity. For any application for an exchange platform, there are needed around 25 different documentations, along with more company data, including documents regarding all owners and directors, as well as the application itself. One should also be ready to disclose contracts with third-party providers.
Even though the number of documents needed to be filled in seems overwhelming, this shows very well what it takes to safely run an exchange platform. Most cryptocurrency users and experts assure applicants that these requirements are not exaggerated, arguing that this type of documentation has to be in place to make businesses operate safely.