CMS Expert Guide to Crypto Regulation in Czech Republic

Yes, currently the only financial services regulation in respect of cryptoassets is under the Czech AML Act, i.e. in connection with anti-money laundering (AML) and counter-terrorist financing (CTF).

A provider of any services related to virtual assets in the Czech Republic is considered an AML obliged entity and therefore regulated as such. All cryptoasset related service providers need to follow the rules on identification and due diligence of their clients, establish internal policies, report suspicious activities and other AML/CTF requirements.

We are not aware of any virtual assets service providers in the Czech Republic that currently hold a financial license (i.e. a license other than the general trade license).

According to the Czech National Bank (CNB) guidelines, the purchase, sale, or exchange of exchange tokens, such as cryptocurrencies, do not currently require any license or registration from the CNB. This is because exchange tokens are not considered money in the economic or legal sense, and these do not represent non-cash money nor electronic money.

The same should also apply to custody of cryptocurrencies, provided that no portfolio management services are provided.

No CNB license is required for borrowing/lending services, although it is currently unclear whether lending services provided to consumers would not require a specific consumer credit license.

Providing services related to virtual assets in the Czech Republic on a continuous basis for profit would in any case require a general trade license issued by a Czech Trade Authority.

Mining, staking or validating transactions do not require a financial service license, but may require a trade license for software services if carried out as a business activity.

NFTs are currently not treated differently from fungible crypto-assets, and it is expected that services related to NFTs will remain subject to the Trade License Act once MiCA becomes effective.

Certain other services, like trading with exchange tokens, derivatives or management of assets containing virtual assets would require a MiFID 2 or AIFM license.

The situation is currently less clear with respect to stablecoins, as these may be considered as e-money regulated under the EU Directive EMD2 as implemented into Czech law. The Czech National Bank has not issued guidance or other regulatory standards assessing the nature of stablecoins linked to a Fiat currency, such as USDC or USDT, but admitted (without further explanation) that certain stablecoins may meet the criteria for e-money (in which case a license of a payment institution or a e-money institution may be required for payment related services).

We are not aware of any virtual assets service providers in the Czech Republic that currently hold a financial license (i.e. a license other than the general trade license).

N/A

Providing services to local customer on the active solicitation basis is interpreted by the local regulator as providing services in the territory of the Czech Republic. This activity would require local license, such as a trade license.

Unlike active solicitation, services provided to local customers on the basis of reverse solicitation are not considered as provided in the territory of the Czech Republic and therefore no local authorisation is currently required. 

N/A

Obtaining the trade license usually costs between EUR 2,000-3,000. The highest costs relate to obtaining and translating the corporate documents, if needed. The above estimate does not include the cost of establishment of a branch or a subsidiary that will likely be required. Establishment of a branch or subsidiary would usually cost up to EUR 10,000. The cost of obtaining a financial license (consumer credit license, payment institution/EMI license or other financial license (under MiFID II or AIFM)) if needed, will be considerably higher.

N/A

Obtaining a trade license is a straightforward exercise, however the Trade Authority will require that the service provider has a branch or subsidiary established in the Czech Republic, unless the trade license is sought by an EU entity.

Obtaining a financial license is relatively difficult and complicated, however if all conditions for issuing the license are met, the CNB must issue the license.