The Czech legal framework is harmonized with the EU 4th AML Directive and it sets a number of requirements for crypto companies in the Czech Republic. The amended legislation encompasses a wide variety of crypto-related operations, as it refers to those organizations that sell/buy, maintain or administer cryptocoins or offer other services associated with digital assets.
From AML perspective, cryptocoins are deemed as digital units that are not included in the category of government-issued money but are accepted as a form of payment for goods and services. Each Czech crypto company is subject to these laws in terms of AML/CFT:
Under the law, businesses planning to carry out their crypto activity in Czechia must acquire a license. It permits operation within the EU, including the establishment of offices in any EU member state without having to tackle red tape, provided that they inform domestic authorities on that.
Holders of EU/EEA crypto licenses are not obliged to acquire a Czech license. Instead, they could inform the Czech authority by submitting them with a passport.
If the crypto company operates without legal permission, it risks being deemed engaged in fraud activities, which is subject to imposing fines of up to 500,000 CZK and being forced to close.
Under requirements, setting up the Czech physical presence of an entity is mandatory. The company may be formed as an LLC – one of the most widely used legal business forms because of the following benefits: low minimum equity requirements, a small number of owners, and the possibility to be exempt from financial audits. Generally, the process of incorporation is completed within 3 weeks, provided that all obligatory papers are provided to the regulator in due course.
An applicant is obliged to satisfy the following obligations:
Once a crypto company has obtained a permission, a licensee must regularly report to the regulator on its operation.
The activity of crypto businesses must be in line with the International Financial Reporting Standards (IFRS). In accordance with it, annual financial statements must contain a balance sheet and income statements. They must be filed along with the tax return.
In terms of auditory rules, the businesses must be audited if they meet at least two of the following parameters:
For other details of requirements for crypto companies in Czech Republic, please contact us. Reach out to our professionals and discover the services we provide.
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