Home > Blog

Why Is It Necessary to Obtain a Crypto License for a DeFi project?

It is extremely crucial to create a fully legally compliant company to reduce personal responsibility for those working in the DeFi industry since these businesses typically offer financial services without the requirement for conventional intermediaries and the supervisory environment is quite murky. DeFi company formation is not a simple task and should not be carried out by people that have no prior experience in company formation. There are presently no laws or licensing requirements for DeFi businesses in numerous locales, which further complicates things. AML and KYC requirements still apply and are the responsibility of the people that launch and operate the company. Making sure that your project is fully licensed is something that needs to be done in order to better navigate the unclear legal landscape and ensure that you are never on the wrong side of the law.

Formats for Implementing DeFi Projects

The decentralized financial industry, or DeFi, is expanding rapidly. Recent reports suggest that the entire value of DeFi has surpassed $50 billion and is still rising. DeFi's meteoric growth in popularity over the last year among blockchain projects is thus not surprising. Many intriguing possibilities have emerged as a result of this pattern, and many more are in the works. Currently, these are the most popular DeFi project formats:

  • Decentralized cryptocurrency exchanges (DEX).

  • DeFi platforms for lending and borrowing.

  • DeFi aggregator platforms.

  • DeFi payment venues.

  • DeFi insurance.

What is the Procedure for Opening a DeFi Company?

All of the above-mentioned types of projects cannot be legally established and launched without a company to govern and implement the DeFi project. In order to legally open a DeFi business, you usually are required to go through the following steps:

  1. Settle on a jurisdiction. Different jurisdictions have different requirements and that means that you will be required to adapt your business model and scope in line with local regulation requirements if you choose wrong.

  2. Hire outside help. This is an optional step. If you seriously value your time and money, this is something you ought to seriously take into consideration.

  3. Gather the required documentation. You will spend a few weeks gathering and otherwise preparing all the required documents for the DeFi company to be launched.

  4. Start a company, apply for a license. As mentioned before, in some jurisdictions, you will need to obtain additional licensing in order to be able to run a DeFi business. The procedure for applying for licenses is standardized.

  5. Open a corporate bank account. This can prove to be difficult, but with enough outside resources and support, it can be done.

Legal Aspects in the Implementation of the DeFi Project

As of the present moment, the law governing DeFi-related initiatives is not very well defined. Not in the typically pioneering nations for such endeavors, and not elsewhere, either. Bringing in a qualified attorney may help you stay out of problems with the law. A professional with expertise in the internet-based economy or the chosen jurisdiction would be ideal. That way, you can ensure that you can adjust if the regulatory framework starts to get stricter or simpler in the future. Legal advice is of utmost importance, especially in countries where the government is actively trying to refine their laws for better implementation. You can find out more about the legal implications by talking to experts on the subject.

What is clear is that there will be major shifts in the regulatory landscape for cryptocurrency ventures in the years to come, and the whole scenario can change from moment to moment.

In Which Country to Launch a DeFi Project?

Although different projects are better suited for different jurisdictions, there are still some countries that have emerged in recent times as the most logical places to launch DeFi-related ventures. These include some well-known maverick countries, such as the United States, Estonia, Canada, and Germany. However, the list of the best countries to turn to for DeFi business in 2023 is slightly different. It includes the following nations:

  • Czech Republic. This EU member is a hub for many well-established companies. This is due to the numerous friendly laws that the country has developed in the last few decades. Their economy is extremely vibrant, and they are proud of the fact that it has emerged as a hotspot for DeFi business in Europe.

  • Poland. Yet another European jurisdiction known for its amazing business climate. The economy in Poland is booming and companies that want to operate in the region are clamoring to set up shop there. Moreover, it is very friendly towards innovations.

  • Lithuania. It offers the same advantages as the two countries above, but it is also cheaper. If there is a DeFi company in the world that values high profits from lower investments, it needs to seriously consider Lithuania as its future base of operations.

  • Slovakia. Relaxed legal framework. The country does not care much about excessive regulations in the case of DeFi. Instead, it focuses on letting creative, tech-savvy people do what they want to do.

  • Costa Rica. This Central American nation is booming. It is a country where many of the best tech companies are setting up shop. DeFi entrepreneurs that want to cut costs at the early stages need to keep this country in mind.


Although the world of digital finance and DeFi projects is in its infancy, it is time to get in on the ground floor and become a major player in this market. Indeed, this is a very fertile field that is going to continue to generate great results. For those that are discouraged by the murky legal landscape, it is better to put in some effort and do your research, but know that if you take action earlier, you will be able to take advantage of the favorable situation.

For those already in the field of crypto and looking for a territory that will be favorable to DeFi businesses, it is pivotal to book a consultation with an expert and figure out which jurisdiction is best for your next business venture.

More to Read: