Regulation of cryptocurrency activities in Slovakia
The regulation of cryptocurrency activities in Slovakia is consistent with EU law and primarily focuses on AML/CFT (anti-money laundering and countering the financing of terrorism) compliance. The authorities have acknowledged the value of this cutting-edge technology and clarified the taxation of cryptocurrencies, but they currently take an inflexible approach to regulating cryptocurrencies, suggesting that a comprehensive regulatory framework is not anticipated in the near future.
Despite the lack of strict rules, the Slovak Republic has a number of benefits that draw cryptocurrency businesses looking for a license in a European country. The lowest startup costs in Central and Eastern Europe, a competitive and business-friendly tax system, the availability of nominee directors and shareholders, no restrictions on foreign property or employees, and the highest productivity levels are some of these benefits. Read on to learn how to complete the process if you want to start a licensed crypto business in Slovakia and take advantage of these advantages.
The Slovak Financial Intelligence Agency, which has implemented strict controls on cryptocurrency transactions, is in charge of implementing AML/CFT regulations in Slovakia. This regulatory body closely monitors cryptocurrency businesses and has the power to demand detailed customer information reports, which promotes confidence in Slovak cryptocurrency companies.
The National Bank of Slovakia (NBS)
The National Bank of Slovakia (NBS) is in charge of regulating participants in the Slovak financial market and upholding a steady monetary policy. Although the authorities do not currently grant licenses specifically for providers of cryptographic assets, they do recognize a variety of crypto assets, including those connected to more conventional payment methods like exchange for fiat currency.
The NBS defines cryptocurrencies as digital assets that make use of cryptography, are decentralized, and frequently make use of blockchain technology. Electronic tokens or coins are some other terms that are used. The process of producing cryptographic assets is referred to as mining.
There are several different kinds of cryptographic assets:
Virtual assets: These can be used to pay for goods and services as well as exchange fiat currencies for other virtual assets. They do not grant any new rights.
Utility tokens: These tokens can be used to pay for future subscriptions to the services or goods that the token issuer has to offer.
Investment tokens: Possessing these tokens may entitle the holder to receive assets (such as future profits) from the token issuer or to take part in management decisions.
Initial Coin Offerings (ICOs), which involve issuing and making electronic coins and tokens available to the public in exchange for fiat currency or digital assets, are regarded as a cutting-edge method of financing in the context of cryptocurrencies. Most of these transactions happen online.
Slovakia Crypto License: Suitable for Various Cryptocurrency Activities
A cryptocurrency license in Slovakia offers a versatile framework that accommodates a range of crypto-related activities. Below are some of the activities for which a Slovakia crypto license is suitable:
- Custody: The crypto license allows for custody services, providing a secure storage solution for digital assets on behalf of clients.
- Fiat to Crypto: The license permits the operation of platforms that facilitate the exchange of traditional fiat currencies into cryptocurrencies, enabling users to easily enter the crypto market.
- Crypto Exchange: Slovakia’s crypto license is well-suited for establishing and operating a cryptocurrency exchange, facilitating the buying, selling, and trading of various digital assets.
- Initial Coin Offering (ICO) and Initial Token Offering (ITO): The license enables businesses to conduct ICOs or ITOs, offering tokens or coins to the public in exchange for investments, allowing for innovative crowdfunding methods.
- DeFi Project: Decentralized Finance (DeFi) projects can leverage the crypto license to operate in Slovakia, providing decentralized financial services such as lending, borrowing, and yield farming.
- Registered VASP (Virtual Asset Service Provider): The license allows businesses to become registered VASPs, complying with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations while providing virtual asset services.
- NFT Marketplace: The license is suitable for operating an NFT (Non-Fungible Token) marketplace, facilitating the buying, selling, and trading of unique digital assets like digital art, collectibles, and virtual real estate.
Advantages of Obtaining a Crypto License in Slovakia
Benefits of Obtaining a Crypto License in Slovakia When considering obtaining a cryptocurrency license in Slovakia, despite the stringent requirements imposed by local regulators, there are several notable advantages that make this endeavor potentially beneficial. The following advantages can be highlighted:
- Low start-up costs for businesses
- Crypto assets are not regarded as securities or financial instruments.
- Quick project implementation Possibility to buy pre-made solutions
- 100% Foreign Ownership: Slovakia allows for 100% foreign ownership of companies obtaining a crypto broker license, providing flexibility and opportunities for international entrepreneurs and investors.
- Capital and Income Transfer: There are no restrictions on the transfer of capital and income, allowing for seamless movement of funds related to cryptocurrency activities.
- Currency Control Freedom: Slovakia imposes no currency control restrictions, enabling businesses to conduct transactions in various currencies without unnecessary limitations.
- Foreign Employee Flexibility: There are no restrictions on employing foreign individuals, providing businesses with the freedom to recruit talent globally for their cryptocurrency ventures.
- Nominal Representative Services: Nominal representative services, including nominee directors or shareholders, are available, allowing for additional privacy and flexibility in the management and ownership structure of the company.
- These advantages contribute to creating a favorable environment for cryptocurrency businesses in Slovakia, making it an attractive destination for those seeking to establish and operate crypto-related ventures.
Crypto company formation in Slovakia
If you are considering obtaining a cryptocurrency license in Slovakia, the first step is to establish a local company in accordance with the regulations set forth in the Commercial Code. Fortunately, there are no specific citizenship requirements, and both Slovak citizens and foreigners are subject to the same rules and entitled to the same benefits.
Among the most common legal structures for a crypto company is a private limited liability company, which can be set up within a timeframe of 3-4 weeks, provided all the necessary documentation is properly prepared in advance.
Key requirements for a private limited liability company include:
- Unique company name (it is advisable to have three alternative options prepared)
- Minimum equity of EUR 5,000 (full payment at registration is optional)
- Director residing in Slovakia or another EU country
- 1-50 shareholders
- Local corporate bank account (takes up to two weeks to open)
To establish a private limited liability company in Slovakia, the following documents are typically required:
- Copies of identity cards (or passports) of founders, directors, and beneficiaries
- Proof of permanent residence for founders and directors (utility bills or official documents)
- Articles of association
- Registration act (for a single founder) or memorandum of association (for multiple founders)
- Comprehensive business plan outlining operational structure, principles, and financial details
- Certificate of criminal record issued by the competent authorities
- Educational qualifications (secondary education diploma and any other relevant qualifications for operating a crypto company)
- Power of attorney with apostille (if the registration is performed by a third party)
The main steps involved in establishing a private limited liability company are as follows:
- Verify the availability and reserve the chosen company name with the Trade Register
- Apply for a cryptocurrency license at the Trade Licensing Office
- Submit all required documents to the trade register
- Register for tax purposes
- Register with a health insurance company and the Social Insurance Agency within eight days of commencing crypto business activities
What are the requirements for appointing a director to a Slovak VASP?
The director of a Slovak VASP (Virtual Asset Service Provider) must be a resident of one of the countries within the European Economic Area (EEA). According to the law, there are no additional criteria specified for this position. What happens after completing all the necessary steps? Once you have successfully obtained a crypto license in Slovakia, you can operate and offer cryptocurrency-related services without any limitations or restrictions.
Can I onboard non-EU clients?
Yes, as a VASP authorized in Slovakia, you are not restricted by territorial limitations imposed by legislation. If the chosen jurisdiction does not impose any restrictions, you are allowed to provide services to clients worldwide, including non-EU clients.
What is the duration of a cryptocurrency license in Slovakia?
The cryptocurrency license issued in Slovakia has an indefinite validity period. Once obtained, the license remains valid without the need for renewal or periodic reapplication.