Entering the Czech crypto market:

Are you entering the European crypto asset market and looking for a stable, transparent, and strategically located jurisdiction? The era of unregulated business in the Czech Republic is over. With the arrival of MiCA, a new era is dawning for serious international players. This article will provide you with clear instructions on how to obtain a key license for a crypto exchange in the Czech Republic.

Author of the article: ARROWS (JUDr. Jakub Dohnal, Ph.D., LL.M., office@arws.cz, +420 245 007 740)

A new era for crypto in the Czech Republic: What foreign investors need to know

The Czech legal view of crypto assets has undergone a fundamental transformation. Gone are the days when Bitcoin and other virtual currencies were considered merely "intangible movable property" and their providers operated essentially without specific regulation, often only on the basis of a trade license. While this situation offered low barriers to entry, it also brought legal uncertainty and mistrust on the part of the traditional financial sector.

With the full entry into force of the European Markets in Crypto-Assets (MiCA) regulation and its implementation through the Czech

With the Digital Finance Act, the market is changing radically. This new legislation is not an obstacle, but rather a cornerstone for building a mature, secure, and transparent market environment. For foreign corporations and investors, this means, above all, legal certainty and protection of their investments.

This regulatory change will inevitably lead to the professionalization and consolidation of the market. The high capital requirements, robust internal control systems, and proven expertise of management required by the new license will naturally filter out smaller and less prepared entities.

For you as a strong international player, this means entering the market with fewer serious competitors and greater trust from clients and banking partners.

Our team at ARROWS has been following these developments from the very beginning and advises fintech leaders and foreign investors on how to navigate this new environment. We help clients see beyond mere compliance and discover the strategic opportunities that the regulated Czech market now offers.

The key to your European operation: Understanding the CASP license

The basic prerequisite for the legal operation of your cryptocurrency exchange, exchange, custody, or other related services in the Czech Republic is obtaining a license as a Crypto-Asset Service Provider (CASP).

This process no longer falls under the jurisdiction of the Trade Licensing Office, but is now fully within the competence of the Czech National Bank (ČNB), which is the main regulator and supervisory authority in this area.

The biggest strategic advantage of a CASP license granted in the Czech Republic is the principle of the so-called European passport. This means that with a single license from the ČNB, you can legally offer your services in all 27 member states of the European Union without having to apply for a separate license in each country. This dramatically reduces the administrative burden and costs associated with pan-European expansion.

Choosing a country in which to obtain a CASP license is a key strategic decision for a global company. The Czech Republic offers a unique combination of advantages in this regard: a highly respected and experienced regulator (the CNB), a strategic location in the heart of Europe, and a stable legal environment. Obtaining a license from the CNB carries significantly more weight and credibility than a license from less established authorities, which can make it easier for you to establish key relationships with banks and other financial institutions.

At ARROWS, we provide strategic advice on why the Czech Republic is the optimal jurisdiction for your European crypto operations. Our lawyers have extensive experience in licensing proceedings before the CNB and will guide you through the entire process to successfully obtain your European passport.

Contact our experts in this field:

Navigating between authorities: When to go to the CNB and when to go to the FAÚ?

The division of powers between two key Czech authorities can be confusing for foreign entities. It is essential to understand their different roles in order to avoid fatal compliance mistakes.

The Czech National Bank (ČNB) is the primary authority for granting CASP licenses under MiCA. It is therefore the ČNB to whom you will submit your application for authorization to operate and demonstrate that you meet all personnel, financial, and technical requirements.

The Financial Analytical Authority (FAÚ) is responsible for two key areas. First, it grants authorizations for certain virtual asset services that do not fall within the scope of MiCA.

Second, and most importantly, the FAÚ is the main and very active supervisory authority for the fulfillment of all anti-money laundering and counter-terrorist financing (AML/CFT) obligations.

Many companies focus solely on obtaining a license from the CNB and underestimate the preparation required for strict and ongoing inspections by the FAÚ. This is a fundamental mistake. While the CNB licensing process is a one-time event, compliance with AML obligations is a daily task, and failure to do so can result in draconian fines and even the loss of a license.

Successful crypto operations in the Czech Republic require a dual strategy. ARROWS' legal experts have deep and long-standing experience with both institutions. We will prepare you not only to obtain a license, but also to confidently pass any future AML inspection, for example by preparing documentation for both authorities.

Navigating between authorities: When to go to the CNB and when to go to the FAÚ?

The division of powers between two key Czech authorities can be confusing for foreign entities. It is essential to understand their different roles in order to avoid fatal compliance mistakes.

The Czech National Bank (ČNB) is the primary authority for granting CASP licenses under MiCA. It is therefore the ČNB to whom you will submit your application for authorization to operate and demonstrate that you meet all personnel, financial, and technical requirements.

The Financial Analytical Authority (FAÚ) is responsible for two key areas. First, it grants authorizations for certain virtual asset services that do not fall within the scope of MiCA.

Second, and most importantly, the FAÚ is the main and very active supervisory authority for the fulfillment of all anti-money laundering and counter-terrorist financing (AML/CFT) obligations.

Many companies focus solely on obtaining a license from the CNB and underestimate the preparation required for strict and ongoing inspections by the FAÚ. This is a fundamental mistake. While the CNB licensing process is a one-time event, compliance with AML obligations is a daily task, and failure to do so can result in draconian fines and even the loss of a license.

Successful crypto operations in the Czech Republic require a dual strategy. ARROWS' legal experts have deep and long-standing experience with both institutions. We will prepare you not only to obtain a license, but also to confidently pass any future AML inspection, for example by preparing documentation for both authorities.

Your step-by-step guide to the licensing process

The CASP license application process is complex and requires careful preparation. Here is an overview of the key areas you need to focus on.

office@arws.cz 245 007 740

Personnel and corporate integrity

You must demonstrate the reliability and solvency of your company and all members of its management. This includes submitting criminal record extracts and confirmation of no outstanding debts from financial and customs authorities or social security administrations.

For foreign nationals, it is essential that these documents are from your home country, officially translated into Czech, and accompanied by an apostille for international use.

Professional competence and good reputation

Your company's management must demonstrate sufficient professional competence, i.e., relevant education and experience in the field, and must also have a good reputation. The CNB will carefully examine the CVs and track records of key managers.

Complete application documentation

At the heart of the application is a set of documents that must describe your future operations in detail. The most important documents include:

• A detailed business plan with realistic financial projections.
• A description of the organizational structure and management system.
• Proof of sufficient initial capital and its legal origin.
• A description of IT systems, cybersecurity measures (in accordance with the DORA Regulation) and procedures for protecting client assets.
• A list of all websites and payment accounts that you will use for your activities.

Specific requirements of the FAÚ

If some of your services fall under the supervision of the FAÚ (outside MiCA), you will also have to deposit a security of CZK 250,000 into the account of this authority.

The bureaucratic process associated with international document verification is often the biggest obstacle for our foreign clients. ARROWS takes care of the entire chain of tasks, from obtaining apostilles in your country to providing certified translations, thus preventing unnecessary delays in your application. We will take care of obtaining the necessary permits for you without any hassle.

First hurdle: Risks in the licensing process

The path to obtaining a license is fraught with potential pitfalls. We have identified the most common problems faced by foreign applicants and prepared solutions to prevent them.

Risks to be addressed and potential problems	How ARROWS can help
Incomplete or formally incorrect application - Suspension of proceedings due to missing documents or incorrectly certified foreign documents (e.g., missing apostille).	Preparation of complete documentation: We ensure that all foreign documents are properly verified and translated, and we complete the application in accordance with the precise requirements of the CNB and FAÚ.
Unsuitable senior management - The CNB assesses a member of the management as untrustworthy or professionally incompetent due to an entry in the register or lack of experience.	Legal review and advice (due diligence): We will assess the suitability of key persons in advance and help to prove their professional competence and integrity in accordance with the requirements of the regulator.
Weak or unrealistic business plan - The business plan is rejected as insufficient, financial projections are inconclusive, or there is no description of risk management.	Preparation of professional documentation: We work with the client to create a robust business plan and internal guidelines that meet regulatory standards (including DORA and AML).
Unclear origin of capital - Inability to prove the legitimate origin of funds for initial capital and operations, raising suspicion of money laundering.	Legal opinions and documentation: We prepare a legal opinion and gather documentation proving the legal origin of funds, thereby preventing any doubts on the part of the CNB.
Inadequate technical and security measures - The description of IT systems, cyber security, and client asset protection is found to be inadequate.	Preparation of internal guidelines and contract review: We will help you set up and describe internal processes and review contracts with IT suppliers to ensure they meet the high requirements of DORA and MiCA.
Delays in communication with authorities - Delays caused by language barriers or unfamiliarity with local administrative procedures when responding to CNB inquiries.	Representation before administrative authorities: We will take over all communication with the CNB and FAÚ, ensure quick and professional responses to their requests, and actively represent you throughout the proceedings.
Incorrect choice of regulatory regime - The application is submitted to the wrong authority (e.g., only to the CNB, even though some services also require FAÚ approval).	Initial legal consultation and analysis: At the beginning of our cooperation, we will conduct a detailed analysis of your business model and determine the exact scope of licenses and registrations required by both regulators.

 

More than just a license: Your ongoing AML/CFT obligations

Obtaining a license is only the beginning. From that moment on, your company becomes a "mandatory entity" under the Czech AML Act and must fulfill a number of ongoing obligations. Failure to do so is one of the most common causes of failure in regulated industries.

Key obligations include:

• Customer identification and verification (KYC/CDD): You must implement reliable procedures for verifying the identity of your customers and determining the origin of their funds.
• Internal AML/CFT regulations: You must have a written and regularly updated system of internal policies and risk assessments that describes your AML procedures in detail.
• Transaction monitoring and reporting: Your systems must be able to detect unusual and suspicious transactions, which you are required to report to the FAÚ immediately.
• Training and staffing: You are required to appoint a contact person for communication with the FAÚ and ensure regular and demonstrable training for all relevant employees.
• Travel Rule: When transferring crypto assets, you must ensure that information about the sender and recipient of the transaction is passed between service providers.

For technology companies and startups accustomed to agile development and rapid growth, implementing these processes represents a significant operational cost and cultural change. AML compliance is not just a legal document; it is an active, resource-intensive function that must be integrated into your company's DNA.

ARROWS provides you with more than just legal templates. We help you build a sustainable culture of compliance. We offer comprehensive services including drafting internal guidelines, detailed risk assessments, and certified professional training for employees and management to ensure long-term protection for your business.

Contact our experts on crypto:

The high price of negligence: Sanctions and penalties

Ignoring ongoing obligations can be dramatically expensive. Czech law imposes strict penalties for misconduct that can jeopardize not only your profitability but also the very existence of your company. The following table shows the specific risks and financial penalties you face.

Risks to be addressed and potential problems and penalties	How ARROWS can help
Failure to identify the client (KYC) - Concluding a transaction with an unidentified or insufficiently verified client. Penalty: A fine of up to CZK 10,000,000.	Documentation preparation and training: We implement KYC/AML processes and documentation that protect you from fines and train your employees on the correct procedures.
Failure to report a suspicious transaction - Failure to detect or report a suspicious transaction to the Financial Analytical Office in a timely manner. Penalties: A fine of up to CZK 5,000,000.	Legal consultation and crisis management: We provide immediate consultation to protect you from penalties and advise you on how to correctly assess and report suspicious transactions to avoid sanctions.
Missing or outdated internal policy system - The company does not have a written internal policy and risk assessment system, or does not update it. Penalties: Fine of up to CZK 1,000,000.	Preparation of internal guidelines: We will prepare and regularly update complete AML documentation for you in accordance with applicable legislation and FAÚ practice.
Inadequate employee training - Failure to demonstrate that employees have been properly and regularly trained in AML. Penalty: Fine of up to CZK 5,000,000.	Professional training including certification: We organize certified training for your management and employees, enabling you to fulfill your legal obligations while strengthening your internal defenses against risks.
Breach of confidentiality - An employee informs a client that a suspicious transaction has been reported or that an FAÚ investigation is underway. Penalties: Fine of up to CZK 1,000,000.	Training and preparation of internal processes: Our training emphasizes practical scenarios, including confidentiality obligations, and we help set up internal communication to prevent information leaks.
Ignoring FAÚ instructions - Failure to comply with an FAÚ order to suspend a client's instructions or to secure assets. Penalty: A fine of up to CZK 10,000,000.	Representation before administrative authorities: In crisis situations, we will immediately represent you, take over communication with the authorities, and ensure that your actions are fully in line with their instructions.
Representation before administrative authorities: In crisis situations, we will immediately represent you, take over communication with the authorities, and ensure that your actions are fully in line with their instructions.	Representation before administrative authorities: In crisis situations, we will immediately represent you, take over communication with the authorities, and ensure that your actions are fully in line with their instructions.
Failure to implement preventive measures - Total failure to implement a functional AML/CFT system in practice. Penalty: Fine of up to CZK 5,000,000.	Comprehensive AML/CFT audit and consulting: We will audit your existing processes, identify weaknesses, and propose specific corrective measures to protect you from inspections and sanctions.

Your global partner: Take advantage of the ARROWS International network

For international corporations, legal and tax issues rarely stop at the borders of a single country. A problem that appears to be local – such as obtaining a Czech CASP license – often has implications for your home jurisdiction, whether in terms of tax optimization, corporate reporting, or compliance with local regulations.

That is why the ARROWS International network is a key part of our services. For more than ten years, we have been building this alliance of proven, independent law firms, which now covers over 70 countries around the world, including key markets such as the US, the UK, Germany, Poland, and Hungary.

This network enables us to provide you with truly comprehensive advice. Whether you need to align the operations of your new Czech branch with the standards of your parent company in the US, resolve tax structures within the EU, or ensure intellectual property protection across continents, ARROWS provides you with a single point of contact for seamless and expert solutions.

Build your Czech crypto business on a solid foundation

Thanks to clear and transparent regulation, the Czech Republic is now one of the most attractive places for serious investment in crypto assets in Europe. However, successful entry into this market requires a partner who not only has in-depth knowledge of the local environment, but also global reach.

ARROWS is ready to be your strategic legal partner. Our experience, backed by cooperation with more than 150 joint-stock companies and 250 limited liability companies and the Law Firm of the Year award, is a guarantee of quality and efficiency. We pride ourselves on speed, precision, and connecting our clients with interesting business and investment opportunities.

Contact us today for an initial consultation and build your success on a solid foundation of legal certainty.

Don't want to deal with this problem yourself? More than 2,000 clients trust us, and we have been named Law Firm of the Year 2024. Take a look HERE at our references.