As MiCA comes into force across Europe and regulatory standards rise in Asia and the Middle East, crypto startups still look for qualified support to enter the market, despite requirements and costs increasing substantially.
Key Takeaways:
- MiCA and global rules have raised the entry bar sharply for crypto startups.
- Compliance costs, capital requirements, and banking access have now become core challenges to operating legally in any region.
- Despite higher demands, startup activity remains strong due to high return potential and investor participation.
- Partnering with expert crypto lawyers became essential to turn complex regulations into a future-proof structure rather than a barrier to growth.
Not so long ago, launching a crypto startup required little more than a business plan, a team of developers to write code, and a company incorporated in a tax-friendly jurisdiction. Once all is set, the company would go public to raise capital through an ICO or venture investors, followed by a marketing and community-building routine.
Today, however, before a project can focus on raising money and attracting users, a company needs to dig through complex global regulation, fit-and-proper tests, and licensing hurdles. All of these delay launch, raise costs, and effectively close the door for micro-startups to market or push them toward lower-cost, less reputable alternatives.
The highly volatile nature of crypto assets, with 20% downturns being a common phenomenon, has clearly demonstrated the vulnerabilities of a sector operating with minimal regulatory oversight. Consequently, authorities have tightened their approach, demanding a special crypto license for startups to enter the market.
The earlier approach, where projects could simply incorporate a company and move to a public offer, was now replaced with precise eligibility criteria to get a relevant license and commence operations. Practically, companies can no longer expect to accept users from key markets without a license; serious investors now treat a license as a basic requirement.
For similar reasons, banks have become even more hesitant to open corporate and merchant accounts for crypto startups, given that it has become the number one activity that could unintentionally facilitate money laundering. This introduced an additional requirement to appoint a dedicated anti-money laundering (AML) officer and implement effective AML controls to both meet regulatory expectations and enable access to essential banking services.
Not only launching, but scaling has also gotten much harder. Fragmented and unclear rules across countries are the current reality; every new market entry means getting an extra license and adapting to local rules to avoid operational disruptions.
More regulation equals both more time and more money. This has been the most evident in Europe, where licensing and compliance costs rose sharply, with the average costs recording a 6-fold increase after MiCA, based on the analysis from Sumsub. This partially comes from a mandatory share capital requirement for getting a crypto license, which now starts from EUR 50,000 across the entire EU.
The cost of non-compliance has risen in tandem, with regulators imposing record-breaking fines each year. Yet, the fine alone is not a big problem. The real danger lies in the domino effect caused by continuous non-compliance: enforcement proceedings, asset freezes, reputational damage, declining investor confidence, and, in a worst-case scenario, a complete project shutdown.
As a result, the startups entering the market have changed their approach from rapidly scaling and “try-testing” to operating with caution to avoid regulatory breaches and what usually comes next. Nowadays, founders may find themselves spending twice as much time talking about compliance with legal advisors as with developers and growth managers.
Yet, even despite the steep rise in compliance obligations and subsequent costs, the number of crypto startups looking to enter the market continues to grow. The industry is still perceived as one offering great return potential that outweighs the burden of navigating the rules.
Even facing the mounting regulatory and fiscal pressure, therefore, crypto ventures continue partnering with specialized industry-leading law firms like Inteliumlaw, which help crypto founders navigate the licensing process and ensure ongoing compliance over the long term.
What may look like a straightforward licensing path is typically a result of the hard work of crypto lawyers who work behind the scenes: selecting the appropriate jurisdiction, drafting relevant policies, and ensuring regulators say “yes” as fast as possible.
Launching a crypto business may be harder than ever, but it’s still far from impossible. With seasoned legal counsel, crypto startups can continue to experiment and grow while staying fully aligned with regulatory expectations.
This publication is sponsored and written by a third party. Coindoo does not endorse or assume responsibility for the content, accuracy, quality, advertising, products, or any other materials on this page. Readers are encouraged to conduct their own research before engaging in any cryptocurrency-related actions. Coindoo will not be liable, directly or indirectly, for any damages or losses resulting from the use of or reliance on any content, goods, or services mentioned. Always do your own researchs.
Kosta joined the team in 2021 and quickly established himself with his thirst for knowledge, incredible dedication, and analytical thinking. He not only covers a wide range of current topics, but also writes excellent reviews, PR articles, and educational materials. His articles are also quoted by other news agencies.
Source: https://coindoo.com/starting-a-crypto-startup-became-harder-than-ever-before/