CRYPTOCURRENCY TRADING COMPANY REGISTRATION

CRYPTOCURRENCY TRADING COMPANY REGISTRATION

WHAT ARE CRYPTOCURRENCIES?

Cryptocurrency is a digital currency often referred to as a ‘Token’ that can be exchanged online. Cryptocurrency is possessed, created and, stored digitally. If put into simple words cryptocurrency can be termed as a set of data that is secured by cryptography. Cryptography means the science of coding and decodingdata. Crypto refers to the various encryption algorithms and cryptographic techniques that help in safeguarding the decentralized tokens that are cryptocurrencies, those algorithms are called elliptical curve encryption, public-private key pairs, and hashing functions.

In place of using a centralized banking system and centralized digital currency, cryptocurrency uses a decentralized currency. Cryptocurrency works through Blockchains, blockchains are distributed ledger technology that creates a public financial transaction database. In order to exist outside of the government controls the cryptocurrency uses the decentralized structure.

HOW DO CRYPTOCURRENCIES WORK?

Cryptocurrencies such as Bitcoin are powered by ‘Blockchain’ technology. The blockchain is a decentralized ledger that sounds liketechnobabble but it is actually not very difficult to understand. The cryptocurrency Blockchain is a public database that is created and managed by large computer networks and not by a single entity of a federal or reserve bank, thus making it decentralized.

The new information, such as the recent transactions is grouped together from a block. The block is added to the database that already exists. After the new information is added it cannot be deleted or edited and anyone can review the Cryptocurrency blockchain database. This results in a permanent record of cryptocurrency transactions that are available for public review. 

Cryptocurrency transactions can also be kept anonymous to a certain extent. The way it works is that the transaction done in cryptocurrency are end to end encrypted, although there is a public record for the transactions made, the transaction made from A to B is anonymous in way that there is no information about who A and B are. However, if the person making transaction put their Cryptocurrency address in public, with that address someone else can have access to the transactions made by the person, even their balance can be viewed.

All these complex mathematical transactions require a vast computer technology, that is where the cryptocurrency miners come into play. Miner are like third party who allows the use of their vast computer networks to process the transactions, and they receive cryptocurrency payments in return.

  

STARTING A CRYPTO EXCHANGE COMPANY

There are few important points to take notes of before starting to invest in cryptocurrencies or before starting a crypto exchange company in India. Let’s discuss those points in detail:

1. Seeking proper legal counsel for proper licensing

A cryptocurrency exchange company is not very common in the Indian diaspora, even though the government has not banned the use of it or has banned investing in it, no laws have been formulated on the regulation of such currencies. So, before one plans to start a crypto exchange company in India, it is very important to seek a piece of proper legal advice from an attorney who has experience in the field. The company will have to obtain a license in all the fields and in all the jurisdictions it plans to operate with its business.

In many countries, the governments have not formulated laws that would regulate cryptocurrencies or the government has not caught up with the technologies, in such Countries cryptocurrency operates without oversight. Cryptocurrencies fall under the currency exchange method, so in order to obtain the exchange one must follow the ‘Know Your Customer’(KYC) regulations, KYC has been helpful in combatting money laundering since last the decade.

 

2. Accommodate proper funds

Starting a cryptocurrency exchange company would involve a lot of capital funds, before making registration for company establishment, the applicant should have full information about the cost involved. The costs which are involved include the costs of technology involved, the initial legal counseling, the registration fees, and the advertisement costs. Not all the funds are necessarily required at the beginning but it is always safe to ensure that there is a proper flow of capital whenever it is required.

Often the startups which are involved in cryptocurrency exchange make the mistake of obtaining licensing from questionable crypto exchange providers that charges all the ongoing costs and fail to follow the proper legal requirements, they don’t mention legal obligations and they also fail to mention the costs required for setting up of the company and the costs involved maintaining an exchange.

 

3. A technology solution provider

Before starting a cryptocurrency exchange company, the company owners must find a technology provider which would help the company and its clients in setting up their own exchange features and where the company clients receive the full source code of the exchanges made, source code is very important at the time of auditing.

 

4. Partnering with a payment processor

The payment processors differ in their fee structures, they often vary widely between different companies. In order to be successful, the exchange company will need to operate on the lowest transaction rate. Some of the companies that provide cryptocurrency exchange gateways in India are Binance, Wazirx, Zebpay and, Paytm.

REGISTARING FOR A CRYPTO EXCHNAGE PRIVATE LIMITED COMPANY

In India Private Limited Company is an entity that is held by businesses. For a Private Limited Company, a bare minimum of two member is required, although the number of members can be extended up to 200 at once. The Private Limited Company restricts their shareholder’s liability to the limit of their shares, the total number of shareholders can stretch up to 300.

WHY A PRIVATE LIMITED COMPANY?

1. The risk to personal assets is limited

A private limited company shareholder has limited liability towards their shares. This means that the shareholder is only responsible for the share that they own.

2. A legal entity of its own

A private limited company once registered is an entity of its own, it is separate from the owner of the company. It makes the company responsible for its own assets and liabilities, and debtors and creditors. The creditors will have to move against the company to recover their money and not directly against the owner.

3. A trustable entity

A business with a tag of Private Limited Company automatically increases the trustworthiness. The main reason for this trustworthiness is that a private limited company is registered with the registrar of companies under the companies act of 2013. The company registration details and other details regarding the company can be found on the portal of Ministry of Corporate Affairs. During the formation of the company, it has to go through a lot of documentation and verifications, this makes the company more trustworthy.

4. Raising the Capital

A private limited company can sell their equities and raise funds through them, this is one of the reasons why entrepreneurs prefer registering for a private limited company. It is also easier to expand the business in a private limited company while restricting the liabilities.

5. Long term existence

The registered companies have ‘Perpetual Succession’ which allows the business to run uninterrupted till the time the company is legally dissolved.

STEPS FOR REGISTRATION

1. Digital Signature Certificate (DSC)

For registration of a private limited company a DSC has to be obtained from certifying agency recognised by the government. The DSC is required at the time of filing the forms related to the company registration. The company registration process is online thus making the requirement for a valid digital signature.

2. Director Identification Number (DIN)

The proposed director of the company has to obtain a DIN, it is mandatory for the registration of the company. There is a method through which DIN can be obtained:

• A DIN is issued to the proposed director of the company after filing SPICe or INC-32. The DIN will be issued to only those directors who previously have not taken a DIN number.

3. Selection of the Company Name

To mark the individual existence, it is required to select a unique name. The selected name not be against any government compliance against names. The name of the company must end with PRIVATE LIMITED in it. The name should be unique and not identical or show resemblance to an already registered company.

 

4. Filing of forms SPICe+ or INC-32

These forms are required to be filed for the following:

• Allotment of DIN
• Reserving the name of the company
• Incorporation of a new company
• Applying for PAN and TAN

5. INC-33 and INC-34

These forms are for MOA and AOA. The MOA is responsible for representing the charter of the company. The AOA is responsible for containing the rules and regulations of the company.

6. An application for PAN and TAN

An application for Personal Account Number and Tax Account Number should be filed through form SPICe+ or INC-32. Under SPICe+ form 49A is for PAN and form 49B is for TAN.

DOCUMENTS REQUIRED FOR A PRIVATE LIMITED COMPANY REGISTRATION

FOR INDIAN NATIONALS

1. The members and shareholders have to give an affidavit on a stamp paper.
2. The proof of office address, rent agreement if the office is rented.
3. Passport size photo of the directors
4. ID proof of the directors, i.e., Passport, Driver’s License or Voter ID card.
5. Self-declaration of the proposed director of the company.
6. Aadhar Card.
7. PAN Card.

FOR FOREIGN NATIONALS

1. Passport of the Directors and Members of the company.
2. An address proof of the directors and members of the company.

IMPORT EXPORT LICENSE REGISTRATION IN INDIA

IMPORT EXPORT BUSINESS LICENSE REGISTRATION

In India Foreign Trade (Development and Regulation) Act, 1992 regulatesimport-export businesses. The act gives the government powers to make rules and provisions that work for development and also regulates foreign trade. The provisions that regulate the current foreign trade are available under the Foreign Trade Policy 2021-2026.

The drastic changes in the economic policies in India and the improvement in ease of doing business have become a major game-changer for import-export business among youths in India. Since the e-commerce business took a rapid development in India the way business functions have also witnessed a rapid change. These changes have made it possible for even smaller businesses to reach out globally from the comfort of their homes and order goods and services across the globe.

Businesses that are traded across borders globally are also called import-export businesses. To perform the import-export business, a proper business setup and company registration, taxation registration is required. If the company or business comes with multiple partners it is advisable to have If it is a one-person endeavour, it is recommended to chose Proprietorship Registration.

The most important license required to start an import-export business in India is Import Export Code (IEC). This code is provided against the registered companies Personal Account Number (PAN). To obtain the license one has to file an application to the Joint Director General of Foreign Trade, Government of India. The importance of obtaining an IEC is similar to that of a PAN. The IEC comes with lifetime validity and it is needed at the time of clearing customs, sending shipments, and also for sending or receiving money from a foreign currency.

 

HOW TO OBTAIN IMPORT EXPORT CODE

 IEC is required for import-export firms when shipments are to be cleared at the customs and when funds are to be sent overseas. IEC for exports helps in when shipments are sent and money has to be transferred in their bank accounts. The Director-General IEC comes with a 10-digit code that has lifetime validity.

The government of India

Following are the procedures through which IEC can be obtained:

1. Filing an application form in the AayaatNiryaat form number 2A format.
2. Sending it to the concerned Regional office of the Director-General of Foreign Trade.
3. Address Proof.
4. Identity Proof.
5. PAN of the director of the Firm.
6. Certificate of Registration of the firm or proprietor in question.
7. A copy of the canceled cheque of the current bank account of the firm or proprietor.

 

 

PROCESS TO START AN IMPORT-EXPORT BUSINESS IN INDIA

 

IMPORT PROCEDURES

1. Import Export Code

To start importing from India every import firm or proprietor is required to obtain an Import Export Code from the Director-General of The Foreign Trade, Government of India. Only those goods will be allowed to import inside of the country that is in compliance with section 11 of the Customs Act, 1962. The items that are restricted or prohibited by the government will need to haveadditional permission from the Director-General of Foreign Trade, Government of India.

 

2. Obtaining Import Licenses

An import license is of two kinds, a General license and, a Specific license. Goods can be imported from any country under a general license. Under specific license only authorised country products can be imported.

To determine whether a license is needed to import a particular product or service, the import firm must classify the item through Indian Trading Clarification that is based on ITC classification. ITC classification is the chief method used in India to classify the trade items for import-export operations. The ITC-HS code is an eight-digit code issued by the Director-General of Foreign Trade. The code represents the category or class of the products that is used by the importer in following the government regulations for goods to be imported or exported.

 

3. Registration-cum-Membership-Certificate

After obtaining IEC for the import-export business in concern, RCMC is required. RCMC certificate is issued by the Exports Promotions Council. India has 26 Exports Promotions Council, the RCMC certificate can be obtained from any one of these council locations.

 

4. Custom Clearing Formalities

Once a license is procured by the concerned firm or proprietor, according to section 62 of the customs act, they are required to provide the import declaration in the prescribed Bill of Entry along with PAN-based Business Identification Number (BIN). A Bill of Entry contains all the important information regarding the nature of the goods, the exact quantityand value of goods.

No Bill of Entry is required if the products are cleared through Electronic Data Interchange (EDI) system.

If the Bill of Entry is without an EDI system, the firm or proprietor will have to submit the supporting documents that would include Certificate of Inspection, Certificate of Origin, Bill of Exchange, commercial invoice, etc.

 

EXPORT PROCEDURES

 

1. Business Setup

After procuring a business license for the Import-Export business it is important for the firm or the proprietor to establish a well-thought plan of action for the business. It is recommended to follow the following steps:

1. Products or services to be exported
2. Costing of Input costs
3. Working capital requirement
4. Long-term capital requirement
5. Customer study
6. Market study
7. Transportation and logistics

 

Just as in import procedure an IEC number is required issued by the Director-General of Foreign Trade. Once IEC is obtained the exporter is required to ensure that the products in concern to be exported are met with all the legal compliances under different trade laws in India. The exporter is also required to make a registration with the Indian Chamber of Commerce (ICC). ICC issues Non-preferential Certificates of Origin that certifies that the products to be exported in India are of Indian origin.

DOCUMENTS FOR IMPORT-EXPORT BUSINESS

1. Commercial documents which are exchanged between buyer and seller and seller and buyer simultaneously.
2. Documents that concern the custom authority, excise authority, andlicensing authorities.
3. Bill of Lading.
4. Airway Bill.
5. Commercial Invoice.
6. The List of packages.
7. Bill of Export. (For Exports)
8. Bill of Entry (For Imports)
9. GST return Forms.
10. GSTR refund form.
11. Exchange control Declaration.
12. Bank Realization Certificate.
13. Registration-Cum-Membership-Certificate.

FINTECH COMPANY REGISTRATION PROCESS IN INDIA

FINTECH COMPANY REGISTRATION PROCESS

A company providing financial services through the use of software or some other digital technology can be termed as a Fintech Company. Fintech has come from a combination of two words, Finance and Technology. So, when a company offers financial services using technology or technological devices such as the internet, mobile phones, cloud services, or software technologies are known are Fintech Companies.

The Finance and Technology combination has emerged as one of the largest business sectors in the Financial Industry. Fintech is used by Multi-National Companies, Small-scale business industries, and Individual consumers to manage their financial operations better. Earlier, technology was used in Financial Services for back-end services such as to organise day-to-day transactions and handle daily affairs of the company. But it has now evolved and has become a major part of the financial sector. Fintech Industry now operates in every major sector such as Education, Retail Banking, Fundraising, non-profit, etc.

 

WHERE IT ALL BEGAN

The Banking sector started using the Fintech Industry initially for its general operations but as time moved forward the industry saw a rapid change and developed majorly in its operations in different sectors such as the Insurance sector, asset management sector, payment gateway sector, etc. In India,the Fintech sector peeked after the demonetization. 

The major development in the Fintech sector has seen a huge wave of changes in the business dealings and the performance of monetary services. In the 1990s the Industry grew largely after the introduction of the software application PayPal, established in 1998. Likewise in India, the Introduction of PayTm, Google Pay, PhonePay, and other UPI services helped in the growth of this Industry.

However, the growth in Fintech Industry has made the payment experience easier for consumers worldwide. Whether a consumer is buying an online ticket or paying for the food ordered online or making payment after purchasing groceries online, the Fintech Industry has revolutionised the payment method. According to a report by NASSCOM, the Fintech Industry in India is expected to double from the current$1.2 Billion to $2.4 Billion by 2021.

 

FINTECH COMPANY SERVICES

1. CROWDFUNDING PLATFORMS

Entrepreneurs and early-stage business platforms useFintech Software to raise funds from all over the world that allows them to bypass the boundaries and reach the global market and global investors. Entrepreneurs can easily venture into new markets using Fintech Industry as it helps in proceeding funds easily from all over the globe.

 

 

 

2. PEER TO PEER LENDING

Peer to peer is an online platform that directly connectssuitable lenders and borrowers annihilating any kind of intermediates. Peer to Peer services is used for a faster and convenient way to access the required funds.

 

3. MOBILE PAYMENTS

One of the most popular services provided by the Fintech Industry is Mobile applications used for making payments. The applications allow the consumers to keep tap of and carry out all their banking activities without having to visit the bank personally. Some of such platforms popular in India are PayTm, PhonePay, etc.

 

4. RETAIL INVESTMENT

Fintech Companies provide customized financial services to individuals or companies. With an aim to ensure optimal use of finances Fintech Industry works in managing the funds as it is required by the customer. Some of those companies that operatein India are PolicyBazar, BankBazaar, etc.

 

5. INSURETECH

The term Insuretech has been coined from Insurance and technology. The Insurance model is tailored by Fintech software for the customers. It also helps in streamlining the insurance process through online claims filing and policy management.

 

6. REGULATORY TECHNOLOGY (REGTECH)

Regtech offers fast and coeffective management of large amounts of dataincluding transaction records and the required documents such as corporate tax returns.

 

FINTECH COMPANY REGULATIONS IN INDIA

The technological advancement in the Fintech Sector has increased the crime rate in Financial Sector in India. It has increased the responsibility of regulating the Fintech Sector or the Financial Sector. In India, the bodies governing the regulatory aspects of the Financial Industry are, RBI, SEBI, IRDAI, Ministry of Electronics and IT, and Ministry of Corporate Affairs. The Fintech Sector and other such sectors such as cryptocurrency or payments on the other hand are regulated by RBI.  

Some of the legislations are following:

1. REGULATORY SANDBOX

Regulatory sandbox or RS refers to an environment created by the regulatory bodies for live testing the benefits, safety, and viability of the new technology or products released. The companies participating in the RS release their innovation in the protected closed environment to a limited set of customers for a short span of time without worrying about certain constraints and liabilities.

RBI issued the regulatory sandbox framework on August 13, 2009. As per the regulation the companies eligible to participate in RS are Fintech companies, it also includes certain start-ups, banks, financial institutions. The RS is a medium through which it is tested whether an innovation is going to work in the Indian Market.

Some of the benefits of Regulatory Sandbox are that it boosts the Learning by Doing method, it facilitates the testing of products viability at less cost, it also provides a well-structured and institutionalised environment for evidence-based regulatory decision-making.

 

2. PAYMENTS AND SETTLEMENT SYSTEMS ACT, 2007.

This act regulates and supervisesfinancial institutions in India. Under this act, the RBI made two regulations, the Board for Regulation and Supervision of Payment and Settlement Systems Regulations, 2008 (BPSS regulations) and therefore the Payment and Settlement Systems Regulations, 2008 (PPS Regulations).

Under the BPSS regulation policies and settling, standards are prescribed. It also authorises the regulatory body to supervise all the payment and settlement systems in the country.

The PPS lays down the necessary requirements for carrying on a payment system.

 

3. NBFC REGULATION

If a proposed Fintech Company falls under the prescribed criteria by the RBI it will have to register itself for an NBFC license. Under section 45-IA of the RBI Act, it is stated that no NBFC licensed company can carry on their business of non-banking financial institutions without obtaining a registration certificate from RBI.

 

4. REGULATION OF PREPAID PAYMENT INSTRUMENTS

Prepaid payment instruments or PPIs are instruments that facilitate the acquisition of products and services that has financial services, remittance facilities, etc. against the value stored on such instruments.

 

5. REGULATION OF PAYMENT INTERMEDIATES

Under section 18 of the P&SS Act, the RBI issued directions regarding the opening and operation of accounts and settlements of payments for electronic payments transactions involving intermediates. This was regulated to protect the customer’s interest and ensure that the payments made by them are duly accounted for by the intermediaries receiving such payments.

 

 

 

STARTING A FINTECH COMPANY IN INDIA

1. CHOOSING A BUSINESS STRUCTURE

The initial step towards starting a Fintech Company is to decide the most accurate business structure. There are three suitable business structures for Fintech Company in India, Limited Liability Partnership, Private Limited Company, and Sole Proprietorship. It is recommended to chose Private Limited Company as the business structure. In a Private Limited Company, the directors and shareholders of the company have no personal liability towards the creditors of the company as after the registration of a private limited company it becomes an entity of its own with certain rights and liabilities.

2. REGISTERING FOR GST

A finance company is required to register for GST and obtain GSTIN for the business.

 

3. OBTAINING LEGAL DOCUMENTS AND AGREEMENTS

Following legal documents are important to be acquired before applying for registration of the Fintech Company:

1. Co-founders agreement
2. Intellectual Property Licensing agreement
3. Privacy Policy
4. Website User policy
5. Terms of use for mobile application users
6. Vendor agreement
7. Product development agreement
8. Employment agreements
9. The members and shareholders of the proposed company have to give an affidavit on stamp paper.
10. The proof of office address, rent agreement if the office is rented.
11. Passport size photo of the directors.
12. ID proof of the directors, i.e., Passport, Driver’s License or, Voter ID card.
13. Self-declaration of the proposed director of the company.
14. Aadhar Card.
15. PAN Card.

 

4. OBTAINING INTELLECTUAL PROPERTY

Intellectual Property Rights (IPR) includes copyrights, Trademark, Patent, anddesign. A Private Limited Company registering for a license has to protect its brand names, the company logo, website, etc. All these can be obtained after registering in their respective government offices.

 

5. LICENSING

The proposed company has to procure a license for the type of service it is going to provide. Following are the licenses required:

1. Payment Service: ‘Differentiated Banking License’ has been introduced by RBI to issue Tap-on for the businesses that want to start banking services. To procure a license for this the applicant can apply for registration with RBI.
2. Retail Service Providers: License to carry out lending and depositing services for all the micro, small or medium industries.
3. Financial Management: The RBI has regulated that fintech companies shall be registered as NBFCs.