Crypto License in Austria

The legality of cryptocurrency business in Austria

Cryptocurrency business is legal in Austria, regulated since January 2020 and the enforcement of the 5th European Money Laundering Directive (5MLD). This European directive implements virtual assets into the rules pertaining to anti-money laundering.

A European directive is a proposal formulated within the European Union that can be enforced by the member states if they wish to. Austria has decided to enforce the 5MLD and this has laid out the basis of the legality of cryptocurrency business in Austria.

The AML regulation was implemented in the FM-GwG (Finanzmarkt-Geldwäschegesetz, English: Financial Markets Anti-Money Laundering Act) as amended in 2019.

The Act makes cryptocurrency business legal in Austria by defining why and how it has to be regulated, as well as by whom. The Austrian Financial Money Authority (FMA) is subsequently designated as the qualified regulatory authority and supervisor of licensed crypto companies in Austria.

Cryptocurrency regulation in Austria

The cryptocurrency regulation in Austria is based on the FM-GwG’s 2019 amendment, which implements the 5th European directive about Money Laundering. This directive added guidance for regulators to permit and supervise virtual asset service providers.

The regulation establishes the requirement for a VASP to register with the FMA, in order to legally provide their services in Austria. The Act lays out the criteria to be met by the company before, during and after application to a crypto license.

This cryptocurrency regulation will be in force in Austria until the voting and enforcement of MiCA (Markets in Crypto Assets) at the level of the whole European Union.

Contact LegalBison’s FinTech lawyers team for the latest up-to-date information and advice on managing the transition to the MiCA regulation.

Austria Virtual Cryptocurrency Registry

Every company registered as a virtual asset service provider in Austria is listed into the regulator’s virtual cryptocurrency registry. Accessible through the database of the Financial Markets Authority, the register lists all the licensed companies, whether based in Austria or in another EU member state.

Each cryptocurrency company listed in the registry is shown to the public, with its office address and license number disclosed.

It is worth noting that the register does not only list Austria-based companies. Among the 17 companies licensed in early 2024, a few of them were based in Germany and the Netherlands. This demonstrates that the Austrian license can be obtained by a non-Austrian company.

Crypto-authorization process in the Austria Virtual Currency Registry

To register as a virtual currency service provider, one must follow the crypto authorization process in Austria. VASP license is granted after successfully completing the process and getting the approval of the FMA.

The registration of Austria Company in Register of crypto currency companies

The application to register a company in the Austrian register of crypto currency companies is performed online, after due preparation of the legal paperwork and corporate requirements.

The crypto project has to acknowledge all the necessary elements to be prepared and fulfilled before carrying out an application for registration as a VASP in Austria. Once ready, the registration application has to be submitted by emailing the Financial Money Authority.

This first contact with the regulator is only the first milestone to reach in the process, as assessment and possible requests for additional documents, interviews and other information are likely in the course of the next 6 to 18 months of the licensing procedure.

Governmental Statements on Crypto in Austria

Austrian authorities were early to pay attention to cryptocurrency. In March 2018, National Bank of Austria’s governor, Ewald Nowotny, insisted on the importance of regulating and better informing the public about cryptocurrency and their inherent risks.

The issuance of a crypto regulation less than 2 years after this statement is a significant demonstration that Austria believes in crypto. Nowotny’s governmental statement on crypto in Austria underlines the awareness that cryptocurrency is here to stay and the country must do its best effort to integrate it smoothly.

Requirements to form a crypto licensed company in Austria

There are numerous legal requirements for companies engaging in crypto activities in Austria. A crypto company can only receive the FMA approval in the form of a VASP registration by first fulfilling these requirements and demonstrating their enforcement in the operations.

A company shall for example provide detailed information about its corporate structure:

• Name, address, registration number and contact details;

• Identification and judicial records of directors and beneficial owners;

• Depiction of the ownership and control structure of the operation, supported by an organization and holding chart;

• Detailed business model with a description of the services to be provided from the following list:

• Private cryptographic key backup services to keep, store, and transfer virtual currencies on behalf of a customer (electronic wallet providers)

• the exchange of virtual currencies for Fiat money and vice versa ;

• the exchange of one or more virtual currencies among themselves ;

• the transmission of virtual currencies ;

• the provision of financial services for the issuance and sale of virtual currencies.

The project is also expected to comply with safety and AML-CFT standards:

• Internal control system, strategies and procedures to comply with AML-CFT regulations;
• Appointment of an Anti Money Laundering Officer with the relevant background and experience to undertake the position;
• Fit & Proper test of all participants.

The application and all the supporting documents must be either in German or English language.

Finally, a fee of 3,000 EUR is charged for the processing of the VASP registration by the FMA.

The process of setting up a company for a cryptocurrency business in Austria

Setting up a company for a cryptocurrency business in Austria is not mandatory, provided that the project’s company is headquartered and operating from another European jurisdiction. There are cases of Dutch and German crypto companies operating under an Austrian VASP license.

Formation of an Austrian company, in the form of a GmbH (limited liability company) is a straightforward process that takes about 2 to 3 weeks to complete. An Austrian company is seen as prestigious in the world of business, especially connected to any form of financial services.

The process simply involves the provision of documents about the participants and notarization for acceptance by the Austrian authorities.

Taxation of cryptocurrency companies in Austria

Cryptocurrency companies that are incorporated in Austria are liable to pay taxes on their corporate income, independently from their sphere of business.

The standard rate of taxation for Austrian businesses is 23% of the corporate profits since 2024. There is a minimum taxable amount, that is 875 EUR per quarter.

Dividends paid out by an Austrian company are taxed at the height of 27.5% if they are paid out to individuals, 24% if they are directed to companies abroad (holdings, sister companies, etc).

Obligations of crypto companies in Austria

To maintain its crypto license in Austria, a virtual asset service provider must respect the obligations laid out by the law and underlined by the regulator. These obligations are pertaining to compliance with anti-money laundering measures and countering the financing of terrorism.

Every licensed entity by the Financial Markets Authority of Austria is subject to ongoing supervision. The FMA assesses if the crypto business is in line with the provisions of the FM-GwG and the European Regulation 2015/847 on transfers of funds. This ongoing supervision is not free for the crypto company. 1% of the annual gross fees from virtual asset services should be paid as a fee to the FMA (or a minimum of 500 EUR).

The Law also describes different types of obligations that must be observed at all times by the crypto company:

• Conducting due diligence to its clients;
• Retention and protection of client data;
• Reporting obligation to the authorities by the AML officer.

Sanctions for violating Austria’s crypto-business obligations

The Law describes the possible sanctions for violating Austria crypto-business obligations.

Failing to protect clients’ funds and data, reporting incomplete or false information, appointing unqualified personnel as a facade, etc, are all offenses that are liable to a preventive fine of 150.000 EUR. Failing to prevent further similar wrongdoings can lead to fines of up to 5 million EUR or twice the benefit derived from the wrongdoing.

The provision of virtual asset services without proper registration to the FMA for an Austrian crypto license is liable to a fine of up to 200.000 EUR.

Individuals can be held as criminally liable if their power over the company and their responsibility and malevolence over the violation is proven.

REGISTRATION OF A (LIMITED LIABILITY) COMPANY IN AUSTRIA

Though any company formed within the European Union can legally apply for a crypto license in Austria, we advise the registration of a domestic company.

• Registration of a company in the limited liability form in Austria;
• It is possible to receive the set of apostilled corporate documents for an Austrian crypto company by mail/scan;
• Legal address for the company registered in Austria.

APPLYING FOR THE CRYPTO LICENSE IN AUSTRIA

Becoming a VASP in Austria requires sending out a full application to the Financial Market Authority of Austria.

• Demonstrate ability to perform due diligence and Know-Your-Customer duties;
• Appoint an FMA-qualified AML officer for Compliance duties;
• Drafting of policies and procedures for the monitoring and reporting of transactions;
• Demonstration of fitness & property, as well as professional qualifications, of team members.

OPENING A B2B AND B2C CORPORATE ACCOUNT

A crypto licensed company is many times more likely to successfully be allowed to open a bank account for its activity, than a non-regulated one. With a crypto license in Austria, it becomes realistic to open corporate and payment accounts within one to two months.