Crypto licensing refers to the official authorization or registration required for businesses dealing in digital assets. Regulators worldwide now require virtual asset service providers (VASPs) – such as crypto exchanges, brokers, wallet custodians, payment companies, and stablecoin issuers – to be licensed or registered and supervised.

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Other intermediaries (brokers, crypto ATMs, DeFi platforms with intermediaries, etc.) may also fall under licensing depending on local law. 

Importantly, individuals using crypto for personal investment are generally not required to be licensed – the focus is on businesses serving customers or moving funds. By obtaining a license, a crypto business demonstrates it meets required standards, which can enhance its credibility with partners, banking institutions, and investors.

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European Union (MiCA and CASP Regimes)

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Europe introduced a unified framework through the Markets in Crypto-Assets (MiCA) Regulation, making it one of the most significant jurisdictions for crypto businesses. Adopted in 2023, MiCA establishes common EU-wide rules for crypto-asset issuers and service providers. Under MiCA, any Crypto-Asset Service Provider (CASP) (e.g., exchanges, brokers, custody/wallet providers) must obtain a license from an EU member state regulator. A key advantage is EU passporting: a CASP licensed in one member country can “provide their services in all EU countries” under a single authorization. This means a startup can, for example, get licensed in France or Lithuania and then operate across the 27 EU states without needing separate approvals – a huge market opportunity. 

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MiCA’s rules cover areas like disclosures, prudential safeguards, conduct, and AML compliance to ensure high standards across the Union. It specifically addresses different token types (utility tokens, asset-referenced tokens or “stablecoins”, etc.) and even includes measures against market abuse in crypto markets. Notably, non-fungible tokens (NFTs) and fully decentralized services (DeFi without intermediaries) are mostly outside MiCA’s scope for now. 

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United Kingdom (FCA Registration for Crypto Assets)

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The UK has emerged as a reputable, albeit demanding, jurisdiction for crypto ventures. Rather than a separate “crypto license,” the UK requires crypto companies to go through a registration regime with the Financial Conduct Authority (FCA) focused on AML and counter-terrorist financing controls. Any business carrying out “cryptoasset services” (such as exchanging crypto or providing custodian wallets) in the UK must register with the FCA and cannot operate otherwise. 

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The FCA examines whether the firm has AML systems, qualified personnel, and effective controls before adding it to the register. This process is known for its rigor – many applicants have been refused or withdrawn, as the FCA sets a high bar for approval – but as a result, those that do get registered send a strong signal of trustworthiness to banks and customers. In essence, the UK treats crypto firms similarly to other financial firms from an AML perspective: they need to implement customer due diligence, transaction monitoring, reporting of suspicious activity, etc., under the FCA’s supervision. For now, the benefit of the UK regime is the credibility and investor confidence that comes with being overseen by a well-respected regulator in a major market. 

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Singapore (MAS Licensing under Payment Services Act)

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Singapore is widely regarded as a clear and innovation-friendly jurisdiction for crypto and fintech. Crypto activities in Singapore are regulated primarily under the Payment Services Act 2019 (PSA), overseen by the Monetary Authority of Singapore (MAS). The PSA created a licensing framework for providers of various digital payment services, including digital payment token (DPT) services, which is the category covering cryptocurrencies. 

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There are three license classes under the PSA (money-changing, standard payment institution, major payment institution), depending on transaction volumes, and most crypto firms end up needing either a standard or major payment institution license. MAS requires these licensees to meet stringent criteria: fit and proper management, adequate compliance structures, IT security measures, segregation of customer assets, etc. MAS serves as a one-stop regulator for both AML and broader conduct issues. Singapore’s licensing can cover a range of activities (payments, remittances, crypto dealing) under one umbrella, which is efficient for crypto businesses offering multiple services.

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United Arab Emirates (Dubai & Abu Dhabi Regulations)

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The UAE has rapidly become a crypto regulatory hotspot, with authorities in different Emirates establishing regimes to attract and oversee crypto companies.

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In 2022, Dubai launched the Virtual Assets Regulatory Authority (VARA), the world’s first dedicated regulator for virtual assets. VARA is empowered to license and supervise crypto businesses across Dubai (outside of financial free zones). It has since published regulations covering all key activities, from exchange services and custody to advisory services, under a tailor-made rulebook. 

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The benefit of Dubai’s VARA regime is its agility and clarity – rules are designed specifically for crypto (not retrofitted from finance laws), and VARA has been actively engaging global crypto players.

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Even before Dubai’s VARA, the Abu Dhabi Global Market (ADGM) – an international financial center in Abu Dhabi – pioneered crypto regulation in the region. In 2018, ADGM’s Financial Services Regulatory Authority (FSRA) introduced a framework for virtual assets. Any firm in ADGM that wants to perform crypto asset business (exchanges, custodians, brokers dealing in crypto) must obtain a Financial Services Permission (FSP) from the FSRA, just as one would for traditional financial services. The rules cover prudential requirements, technology risk management, market conduct, and AML. ADGM has attracted several major crypto companies and continues to update its rules (e.g., proposing frameworks for NFT marketplaces and decentralized finance) to stay at the forefront.

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Switzerland (FINMA and the Crypto-Friendly Framework)

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Switzerland has long been a hub for blockchain projects and takes a somewhat unique approach: rather than a special crypto license, Switzerland applies its existing financial laws to crypto activities, combined with self-regulatory oversight for AML. Individuals and unintermediated peer-to-peer trading are generally outside regulatory scope. Swiss law applies to the moment a business involves intermediating or custodial services. 

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If a crypto business starts offering services analogous to banking or securities, it may need a full FINMA license. Meanwhile, if a token is deemed a security (asset token), then operating an exchange or advising on such tokens might require a securities dealer or securities exchange license. In 2021, Switzerland even adapted its laws to recognize DLT-based securities and allow for a new type of trading venue (the DLT Trading Facility).

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Why Switzerland? For crypto startups and investors, Switzerland offers regulatory stability, clarity, and prestige. Сompanies choose Switzerland because they can benefit from well-established legal definitions (reducing uncertainty about token status), and a pragmatic AML regime. 

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Hong Kong

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In June 2023, Hong Kong implemented a mandatory licensing system for Virtual Asset Service Providers (VASPs), focusing initially on crypto trading platforms (exchanges). The framework, overseen by the Securities and Futures Commission (SFC), operates on the principle of “same activity, same risk, same regulation” – meaning if a platform trades virtual assets in a manner similar to securities, it should be regulated similarly to a securities brokerage in terms of investor protection and market integrity. 

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Under Hong Kong’s Amended Anti-Money Laundering and Counter-Terrorist Financing Ordinance, any company operating a “virtual asset trading platform” that offers trading of crypto (defined as virtual assets) must apply for an SFC license.  The SFC also issued detailed guidelines on token due diligence, custody of assets, and cybersecurity for these platforms. 

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For startups and exchanges, obtaining the SFC license means they can tap into Hong Kong’s large investor base (both retail and institutional) under a well-defined legal framework. Hong Kong’s financial authorities have indicated that fostering the virtual asset sector is part of a broader strategy to maintain the city’s fintech competitiveness, all while “providing a robust and transparent regulatory environment.

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Ready to move forward?

 

Pick your preferred jurisdiction, or schedule a strategy call with our licensing team—we’ll benchmark options side-by-side and recommend the optimal path for your project. Prefer email? Write to contact@licentium.io, and we’ll get back to you within one business day.