License

A license, in the crypto context, is a formal authorization from a government or regulator that permits a company to offer specific financial services, such as operating an exchange, holding customer assets in custody, or issuing a stablecoin. Licensing regimes exist so that firms handling other people's money meet minimum standards for security, capital, governance, and anti-money-laundering controls before they open for business.

What a license covers, and what it is called, varies widely by jurisdiction: some countries issue dedicated crypto or virtual-asset licenses, others register crypto firms under existing money-transmission or payments laws, and the EU's MiCA framework created a single crypto-asset service provider authorization valid across all member states. For example, an exchange wanting to serve customers in a given country typically must apply to that country's financial regulator, demonstrate compliant KYC and custody procedures, and submit to ongoing supervision and audits; operating without the required license can bring fines, forced shutdowns, or criminal charges.

A common misconception is that a license guarantees a platform is safe or solvent; several licensed or registered firms have still failed or committed fraud, so a license signals regulatory oversight, not an endorsement. For users, checking whether a platform is licensed in their own jurisdiction is still a useful baseline filter, because licensed firms owe customers defined legal protections that offshore, unlicensed venues do not.