Essentially what are the legal requirements for starting the next Binance, Bittrex etc. When I say in the United States I mean US based customers (preferably registered in the US as well.)
The US Gov hates cryptocurrency. In fact if you read recent laws (last 5 years) you'll find the language is vague + it can be construed that if you're a US citizen + you hold cryptocurrency, you may be in violation of law.
Better to simply stick with fiat currency produced by every government in the world.
Treat income management as a currency exchange proposition.
Whatever language you speak, just target selling whatever you're selling into a country that reverse correlates the highest to your currency.
So if you live in New Zealand + US currency is strong against the Kiwi, then sell product into the US.
This way you always win big, because some currency in some country will always be your best investment.
itcoin exchanges, miners, and cryptocurrency-payment processors, operating in the United States are required to comply with federal Anti-Money Laundering (AML) laws.
That means a cryptocurrency user can be prosecuted for violating a number of federal laws. Anybody who converts BTC to USD and sends the money to or from the United States must comply with all AML laws and regulations.
Such laws and regulations are imposed by the U.S. Treasury Department affiliate, FinCEN. The Financial Crimes Enforcement Network is in charge of enforcing the policies and regulations, which serve as a security measure for conducting any financial activity within the U.S. borders.
All money service businesses, including Bitcoin exchanges, come within the provisions of these laws and guarantee a strong bank secrecy, as well as money laundering control. In the case a financial organization fails to abide by the policy, FinCEN is entitled to recourse through competent legal authorities like the FBI or the U.S. Secret Service.
Besides that you will be required to register with SEC.
I don't agree that the US government hates cryptocurrency or crypto exchanges, though I will say that the USG is still unsure how to manage crypto.
The legal requirements vary based on what state you are trying to set up an exchange.
Current Federal law puts regulation of crypto under the jurisdiction of the Commodities Futures Trading Commission. While the Securities Exchange Commision has brought some enforcement cases forward, the courts as of now have sided with the CFTC. So make sure you are following those requirements.
At the same time, each state has (probably, but I can verify) their own registration rules for anyone that participates in bitcoin (i.e. mining, trading, selling, or thinking about mining, trading or selling etc). Many states are taking a second look at those rules as crypto grows in popularity and as regulators figure out how to regulate it appropriately. For example, NYS has registration rules, but it also has legislation that would form a task force to evaluate current rules and propose changes. NY also had the first locality ban cryptomining (Plattsburg), so that will also be part of the discussion. It is timely, as some of the big Wall Street players are looking at launching U.S.-based exchanges.
Incidentally, NYS also has legilstion to study the possibility to launch its own cryptocurrency. That could get interesting.
Hope that helps. Happy to set up a call to chat more about any specific state regulations.
I would suggest that if you are a US citizen that wants to get into crypto from an institutional perspective, you set up an offshore decentralized exchange that doesn't allow US citizens, this has a lower cost of entry. Unfortunately, due to various antiquated US government regulations, you are limited to the number of services your exchange can provide (such as peer-to-peer lending); thus affecting the overall amount of transaction and service fees one can collect. Once you are profitable with that exchange, you can think about opening up to US customers with a separate website, and base trading ability only. Overall, you are going to spend a minimum of 4x the startup costs in the US compared to more lax countries such as Cypress. Here are some links to get you started:
Best of luck. If you have any other questions or need any further help, please feel free to contact me. I am always available.
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