What Are The Regulatory Compliance Requirements For Becoming A Crypto Broker In The US?

Over 320 million people around the world invest in crypto assets. The number is expected to increase to a billion within the upcoming years. Ruling governments are aiming to make the realm more stable and efficient by enabling new regulatory laws regarding the services and platforms of crypto. If you plan to become a crypto broker, here are all the regulatory compliances you need to know.

What Is A Crypto Broker?

A crypto broker is a liaison between the exchange marketplace and the crypto trader. The broker helps traders with the process of buying/selling digital assets for a small commission. The traders usually trade the currencies at a price set by the crypto broker. There are several more advantages to using a brokerage than trading in the central exchange. You can enjoy banking facilities, trading advice, high-end security for your wallet and transactions, and more.

Under the new rules of the infrastructure bill, all cryptocurrency exchanges will be tagged as brokers. Thus, any crypto broker should comply with AML/CFT reporting, record-keeping laws, etc.

Also Read: How Are Crypto Brokerage Platforms Key To Resolving The Primary Deterrent To Mass Crypto Adoption: Liquidity?

Regulatory Compliances For A Crypto Broker

• Brokerage License

According to IIJA, any person who offers brokerage services to another should have a brokerage license to conduct business in the country. The timeline for obtaining this license is currently pushed back.

• AML/KYC Compliance

Although most compliance requirements change with your location and government, KYC and AML compliances are usually mandatory. They help reduce associated risk factors. The process starts with identity verification and establishing legitimacy. Then, AML screening will be conducted to prevent people with financial crimes from participating in the exchange.

• CFT Regulation

CFT is a part of AML compliance. You should maintain and submit the required reports for registering with FinCEN.

• Travel Rule

According to FATF, from 2019, a crypto broker should have an exchange that complies with the Travel Rule. Under this, the virtual currency exchanges will have all regulations just like conventional money transactions, like those set up by the Bank Secrecy Act. Moreover, the exchanges should collect info about the beneficiary and origin of each crypto transaction. In October 2020, an additional adjustment was made to the Travel Rule, the NPRM (Notice of Proposed Rulemaking). Under NPRM, the exchange should collect info about transactions higher than $250 (international transactions) and $3000 (domestic transactions).

General Compliances

• A crypto broker is obliged to inform the authorities regarding any suspicious transactions that might be considered to violate any regulations.
• Implementation of risk analysis, written policies, and control measures of standard practices.

Cryptocurrency Licenses

• The crypto broker should have a platform with a license for foreign exchange services, issue/sale of traveler’s checks, money transfer and remittance, and provisions for background checks.
• A cryptocurrency license could be valid throughout the country, within the state, or a handful of states. If the broker platform operates outside America, a permit valid in any of the states is enough.

Future Regulatory Compliances For A Crypto Broker

• By Fall 2022, the brokers should submit SAR for transactions that exceed 10 thousand dollars, and wallet owners should identify when transferring more than three thousand dollars in a particular transaction.
• OFAC has issued guidelines to block transactions that breach regulations and to identify those sanction breaches.

How Should A Crypto Broker Choose A Crypto Platform?

The crypto platform you select should be a high-end white-label platform with registration and license as per the jurisdiction.  

Along with the mandatory compliances, the platform should have

• Link to a high-security payment gateway and wallet services
• Reliable information technology services like CRM, data centers, and more.
• Around-the-clock customer account management and finance management
• Compliances to rules set by SEC, FinCEN, and IRS
• KYC and CDD process before onboarding
• Customer ML/TF risk determination
• Avoid customers and businesses from prohibited countries imposed by the EU, UN, HMT, OFAC, and others.
• Transaction monitoring procedures
• Anti-bribery and corruption policy
• Sanction policy

These regulations look complicated, and one might think that is a niche reserved for highly informed and well-educated crypto broker corporate firms. However, budding crypto individuals can easily achieve success with white-label access to crypto brokerage platforms.

Unfortunately, choosing a good platform is quite a headache. An unreliable platform might not offer customer support or high trading volume and will have problems with the user interface. If you choose high-end options, you might be slapped with a large transaction charge, withdrawal fee, and other hidden charges. Why not opt for the global digital assets exchange that introduced the world’s first comprehensive white label crypto brokerage platform?

The Best Solution For A Compliant Crypto Broker

If you wish to be a legally compliant crypto broker, you would need a platform that would offer the same. Your first job is to analyze all the top platforms and cross-check with all the required regulations. Save valuable time and resources by choosing the most reliable name in the global digital asset community- PayBito. 

The PayBito cryptocurrency exchange features:

• Branded exchange that supports several fiat and cryptocurrencies
• Crypto banking solutions
• KYC, AML, and other regulations,
• Records maintenance procedures
• High-secure wallet and payment gateway
• Financial crime compliance procedures
•  Legal opinion crypto exchange policies

Wrapping Up

The tech-savvy crypto trading ecosystem requires consistent updates surrounding newly-implemented digital asset regulations deployed by nations around the world. A lucrative career opportunity, entrepreneurs and enterprises can leverage business growth and revenues by venturing into crypto brokerage services, utilizing  PayBito’s instant white label crypto broker platform.