The cryptocurrency landscape is complex, diverse and constantly evolving. For entrepreneurs who want to launch a cryptocurrency project—exchange, wallet, OTC desk, etc.— the right jurisdiction for operation is critical. In this article we will compare the two regions, the EU and US, focusing on factors such as regulatory clarity, speed to market and operational costs.
The European Union and United States are two major financial markets that offer different sets of opportunities and challenges for cryptocurrency businesses. Starting business in the US has vivid advantages:
Launching a crypto exchange project in the EU offers certain advantages as well:
EU regulations aim to be harmonized across member states, which makes it easier to operate in multiple countries. Plus, some EU countries offer regulatory sandboxes to test financial innovations in a controlled environment, providing a smoother entry into the market.
Any of the EU issued crypto licenses—except for Estonia and Czech Republic—allows operating a crypto exchange worldwide. This rule works even outside the EU in places with no local crypto regulation.
In European countries, the process of acquiring the necessary licenses is significantly quicker than in the US. In the EU it takes from 1 to 2 months on average.
The cost of doing business—including legal fees, salaries and rent—may be lower than in the US. Additionally, EU jurisdictions have less stringent capital requirements, making it easier for startups to enter the market. Initial costs for the EU crypto license are EUR 15,000–20,000 + 35% from the EUR 125,000 share capital requirement.
Places like Estonia are known as tech hubs that foster a conducive environment for startups. Besides, with its commitment to free movement of labor, the EU can offer a larger, diverse talent pool.
Some EU countries offer VAT exemptions for cryptocurrency transactions. Moreover, corporate tax rates can be more favorable in EU countries than in the US. More about taxes below in this article.
The time, difficulty and financial levels for launching a crypto project differ between the European Union and the United States.
Research the crypto market. Develop a detailed business plan that outlines your project’s goals, target audience, revenue model, and growth strategy. Choose jurisdiction. Select the EU member state you want to get a license from. Consider the above-mentioned factors.
Establish relationships with EU-based banks for fiat currency operations. Develop robust AML and KYC procedures in line with EU regulations. Build or acquire a secure WL technology infrastructure, including a cryptocurrency trading platform, crypto wallets, crypto OTC desks and cybersecurity measures. Ensure compliance with EU data protection regulations (GDPR).
Consult with tax professionals to understand and comply with EU tax regulations: VAT and capital gains tax. Consider how you will report and pay taxes. Implement proper accounting and financial reporting practices to adhere to EU standards. Consider hiring a local accountant or firm familiar with EU accounting rules.
Prioritize the security of user funds and data. Conduct regular security audits and penetration testing. Engage cybersecurity experts to ensure robust defenses against threats. Develop risk management strategies to mitigate cryptocurrency price volatility and market risks. Consider obtaining insurance coverage to protect against losses.
Provide excellent customer support in the local language(s) of your target market. Develop a marketing strategy tailored to your EU target audience. Leverage local marketing channels, social media and partnerships to promote your platform.
After obtaining the necessary regulatory approvals and licenses, launch your crypto project and continuously monitor and adapt to changes in the regulatory landscape and market conditions.
The process of launching a cryptocurrency project is complex, involving a labyrinth of regulatory, financial and technical considerations. These challenges depend on the jurisdiction, with the European Union often appearing more favorable due to its clearer regulatory environment and lower operating costs.
Given the challenges outlined above, it may be worth considering specialized providers that aim to mitigate these hurdles. Merkeleon offers such a solution. We have been offering white-label cryptocurrency exchange & wallet software solutions since 2014, focusing on providing a scalable platform that caters to advanced traders and newcomers.
Merkeleon helps to acquire necessary licenses, particularly in EU jurisdictions, and open bank accounts. Also, Merkeleon has developed a white-label ecosystem infrastructure allowing operators to grow users’ community offering multiple services within one place:
All of these can be connected into a seamless solution with a single login and unified user balance.
Our company and trusted partners take care of all the essential components, ensuring a hassle-free experience for operators, from legal and technical set-up to ongoing support and maintenance. Book an exploratory meeting with our specialists following this link or book a demo via our website.
Read about successful collaborations with other companies in the crypto space.