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Common Mistakes that Delay Crypto License Applications and How to Avoid Them

The process of crypto licensing may seem like a marathon. You write paperwork, meet with the regulators, and wait to be approved. All in the process of attempting to establish your business. The truth is, numerous applications end up stalling due to preventable errors.

If you intend to get a crypto license in 2025, this is a list of the most common pitfalls people make and how you can avoid them.

Weak AML and compliance policies

Crypto faces the risk of money laundering. Regulators want you to have airtight Anti-Money Laundering (AML) and Know Your Customer (KYC) modules. If your policies appear to be a template, questions will arise, and delays will follow.

Avoidance: Adapt your AML/KYC policies to your business model. Demonstrate to regulators how you will:

Oversee transactions
Report suspicious activity
Safeguard customer information.

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Ignoring IT and security standards

Crypto businesses are technology-based. Therefore, regulators will examine your technical infrastructure. When your cybersecurity, custody, or disaster recovery measures are vague, delays are to be expected.

Prevention method: Document your IT systems. Demonstrate how you will:

Protect digital assets
Safeguard customer data
React to threats.

Although you may outsource infrastructure, demonstrate how you will control vendors.

Underestimating capital requirements

Some applicants believe that they can make ends meet with the bare minimum. This is a red flag to regulators. They want to know that you can work sustainably and protect customer assets.

How to prevent it: Ensure you fulfill the minimum capital requirement. In fact, surpass it where possible. Present clear evidence of capital and a viable financial strategy that demonstrates that your business can make it after the first year.

A weak leadership team

Regulators do not just evaluate your company but also the individuals who run the company. Without the relevant experience in finance, compliance, or technology in your leadership team, your application might not go anywhere.

Avoidance: Hire experienced directors and managers who have a record of achievement in financial services or risk management. As a first-time founder, you will need to balance your team with credible advisors.

Sending an incomplete application

It may sound like an obvious fact, but one of the most common reasons why regulators postpone applications is the lack of documents. Whether it is the shareholder information or compliance manuals, missing a single document can cause delays.

Avoidance: Prepare a checklist prior to submission. Confirm that you have provided all the documents needed by the regulator. This should include CVs of directors and proof of the capital.

Overrelying on generic templates

Most founders try to save on expenses by downloading free policy templates or copying text in other programs. Regulators can immediately identify this. Using a generic, copy-paste application is a sign that you have not reflected carefully on how your business will work.

How to prevent it: Consider each element of your application as a representation of your organization. Customize your policies, risk frameworks, and processes. They should align with your particular products, customers, and jurisdictions.