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.