Lawyer Monthly Magazine - March 2020 Edition

Front Cover Feature Royce Lane One of the most vital steps when expanding internationally is checking everything is compliant with the country’s legal requirements. This means obtaining the right licences and permits for the country, and perhaps for the particular city that your company may be situated in. For example, let’s pretend you want to expand your crypto exchange business. The cryptocurrency sector is ever-evolving and changing and many jurisdictions are yet to formally define the process via its financial regulator, yet in countries where there is more certainty around crypto, such as the USA, Japan or the UK, there are different processes and licences needed. Let’s say you want to expand your UK crypto business to the US. In the UK, you will need to register with the Financial Conduct Authority (FCA), the national regulator that licenses non-fiat currency exchange businesses; some crypto businesses may be able to obtain an e-license or an e-money licence. The FCA guidance also states that entities which are engaged in crypto- related activities and fall under existing financial regulations for derivatives require authorisation. To license a crypto business in the UK, you need to 1 : • Register a legal entity (to an office) to which the existing taxation rules are applied; • Open bank accounts for operations and cryptocurrency transactions; • Prove that the company complies with the requirements of anti-money laundering and terrorism financing prevention legislation; • Prepare a package of documents for obtaining a license for the cryptocurrencies exchange - with a description of risks, a business plan, policies according to AML / KYC legislation, etc. Measures to combat terrorism and money laundering has led to licensing a cryptocurrency exchange taking a long time. For example, in the case of Wirex, the procedure took 9 months 2 . In the US, however, opening a crypto exchange service would be classified as a money services business (MSB) and hence would require a money transmitter licence. This means that exchanges need to: • Be registered as a Money Services Businesses (financial services); 11 MAR 2020 | WWW.LAWYER-MONTHLY.COM Why do companies expand internationally? To operate In markets with counter-cyclical from seasonal changes To extend the sales life-cycle of present products and services already determined expansion plan To take advantage of unique circumstances that present an opportunity to expand To diversify customer base and improve the potential for expansion To take advantage of corporate technology To reduce dependence on the markets already developed To have reduced overheads from nearness to raw materials through lower labour and transportation costs