What are the Rules and Requirements to Set Up a Cryptocurrency Mining Business in Florida?

Bitcoin Trader Concept. Trading Bitcoin Cryptocurrency Conceptual Finance Illustration.

What are cryptocurrencies? 

Cryptocurrencies are nowadays very popular. The United States makes no exception, and many Americans decide to invest in cryptocurrencies. The trend in the past few months was even to buy a Tesla with Bitcoins, a widely known and used cryptocurrency. Using cryptocurrencies allows for more confidential transactions, often at very low transaction fees for international payments, and a greater autonomy: users do not have to go through a bank to deal with their currency. 

Why do you need a Cryptocurrency mining business? 

Cryptocurrencies are created thanks to blockchain technology by cryptocurrency businesses. Through cryptocurrency mining, transactions between users are verified and added to the blockchain public ledger. 

Who can start a cryptocurrency mining business? 

Anyone can start a cryptocurrency business, provided that someone in the company knows how to write codes and create cryptocurrencies. Crypto mining companies can be created with limited amounts of money or space, but there is one requirement that cannot be bypassed: the computer programs to create cryptocurrencies require a lot of energy and a reliable internet connection. 

What you should do before opening a cryptocurrency business: 

Before opening a cryptocurrency business, it is essential to verify that the state where the company will conduct business authorizes ownership and use of cryptocurrencies. Usually, if the state where you live allows you to own and use cryptocurrencies, you are also allowed to mine cryptocurrency in the state. The use of cryptocurrencies is allowed in Florida. 

A crypto mining company is run by cryptocurrency fund managers, who must respect certain requirements before operating in the state. If you decide to open a cryptocurrency mining business, you should follow these steps: 

1) The manager must be registered as a commodity trading advisor (“CTA”) and commodity pool operator (“CPO”) with the Commodity Futures Trading Commission (CFTC) and with the National Futures Association. 

2) The company should be registered with the SEC. 

3) The manager must apply for a Florida Money Transmitter License. 

What kind of company should you create – LLC or corporation? 

A Mining Business should be created in the form of an LLC to provide personal liability protection as there is a high risk associated with the cryptocurrency business. Setting up an LLC is easy and cheap, and is a great way of limiting liability for managers and members. For example, if one of the LLC’s members gets sued because the cryptocurrency crashed and a buyer has lost all of his savings, the Court cannot touch any of the members’ personal assets, only the LLC’s. 

Which states are the most favorable to cryptocurrency mining companies? 

Texas and Florida are the best states to establish crypto mining companies as there aren’t many restrictions and requirements in these states. Texas does not even require a Money Transmitter License, and the energy is very cheap, therefore running the cryptocurrency computer programs is fairly inexpensive in that state. 

Key takeaways:

  1. Pick the state where you want to create the business in carefully, as some states are more favorable to cryptocurrency businesses, 
  2. Pick your manager carefully as he will hold great responsibilities, notably registering the company with the right agencies, and will apply for the necessary licenses. 
  3. Register your company with the SEC. 

EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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