Why Should Crypto Organizations Get an MSB License?

May 08, 2023 at 14:43 PM EDT

The Main Reasons Why a Crypto Organization Should Get an Msb License

Every day, the number of companies associated with crypto assets is increasing, and money transfers and exchanges have become an everyday necessity for millions of people. This spread of the crypto business is associated with a sharp increase in the popularity of digital coins. But to operate a virtual funds business in Canada, organizations must get an MSB license. Today we want to discuss what it is and its benefits.

MSB License

Benefits of an MSB License

The crypto industry is developing, so different countries are striving to learn how to regulate it. So, if you want to work legally in Canada, you must get a work permit. It has several essential benefits:

You can legally work in a country with a developed economy where a large number of crypto enthusiasts live;
No complex requirements for organizations;
Increase the level of trust among investors and clients;
Simple taxation;
High speed of obtaining a work permit.

Many scammers work on the crypto market, so people tend to cooperate only with licensed organizations because this is the main proof that the company is ready to work honestly. All disputes can be resolved within the law.

It is worth saying that the presence of such a work permit makes it possible to work legally not only in Canada but also in other jurisdictions.

General Data About MSB

Money Service Business (MSB) is a non-bank financial institution allowing you to perform certain financial transactions. Potential applicants for a permit to engage in cryptocurrency activities will be considered organizations that provide financial transfer services.

Consider what types of financial activities belong to MSB:

A cryptocurrency exchange is a transaction during which one type of currency is exchanged for another according to the following schemes: fiat-crypto, crypto-fiat, crypto of one kind for another crypto;
Transfer of funds – foreign currency funds are transferred from the account of one company to the understanding of another company using electronic transfer methods (or transfer from the organization’s report to the client’s account);
buying or selling the virtual currency of any kind.

Such organizations that must be registered as MSBs include dealers and companies that provide services only for financial transfers. Getting a permit is strictly controlled in each country, and the regulatory organization depends on the jurisdiction where the license is obtained. Therefore, to get a permit to conduct crypto business within the law, you need to contact the relevant regulatory authorities of the country where you plan to obtain a permit.

The Process of Obtaining a Work Permit in Canada

Canada has established relatively simple rules for regulating the crypto industry. You must obtain the appropriate license if you want to work legally in this jurisdiction. To do this, you need to follow a few essential steps.

Preparation of Papers

To begin with, you need to carefully study your project and ensure that it meets all the requirements of government regulators. Particular attention should be paid to compliance with the AML / KYC policy.

Please involve third-party experts who will help analyze your company’s activities and understand how viable your business plan is.

You also need to collect all the necessary documents, which is almost only possible with the help of lawyers.

Registering an Organization in This Jurisdiction

Your firm must be registered in this jurisdiction to obtain a work permit. So, it would help if you chose a unique name to rent an office and sign a lease for at least 1 year. You must also determine the authorized capital and hire employees for the leading positions. You must also send papers to the regulatory authorities to register your organization.

Opening a Bank Account

Your organization must open a local bank account. Banks consider this type of business associated with many risks, so they are unwilling to open accounts. So, you need to prepare documents confirming that the business can work stably.

After opening a bank account, the firm must deposit the entire authorized capital here.

Getting Started and Registration

After you open a bank account, you can start the company. Your employers have to focus on recruiting and adapting your documents to AML/CTF requirements in the early stages.

Now you can apply for a permit. If all papers are in order and the regulatory authorities have no questions, you will receive a work permit within a few weeks. Regulatory authorities may request additional records or more information about the owner if necessary.

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