The fintech industry in the Czech Republic continues to develop actively. The number of fintech startups is increasing, large fintech companies are entering the local market, and even banks have already begun to develop and implement fintech solutions. Therefore, the idea of registering a company for fintech and crypto business in the Czech Republic now, despite the crisis associated with the pandemic, seems quite reasonable and expedient.
How is fintech activity regulated in the Czech Republic?
Before moving on to crypto activity, let's figure out how and what kind of fintech activity is regulated in the Czech Republic. The Czech National Bank is the main regulatory body for all regulated financial and banking institutions operating in this jurisdiction.
You will have to obtain a license for financial activities in the Czech Republic if you plan to provide investment services. Banking also requires obtaining a Czech banking license.
Lending and trade in loans in the Czech Republic
Consumer loans are governed by the law of the same name, which introduced the Mortgage Lending Directive, thus establishing strict requirements for obtaining a lending license for non-banks. In turn, credit trading is not limited in any particular way, but this does not apply to consumer loans.
P2P consumer lending
A license to issue loans in the Czech Republic is required only if the lending is carried out by a commercial enterprise. To provide unregulated financial services, it is sufficient to obtain a trading license.
The conclusion of credit agreements on an equal basis requires the expression of the will of the parties to the agreement and the determination of the main parameters (amount, loans, terms, etc.). The contract must be in writing. The same requirements apply to the conclusion of agreements on security payments.
Today, few people have not heard of crowdfunding - a system of public funding for those who have original ideas, but no investors and money to implement this idea. Crowdfunding in the Czech Republic is not a regulated activity if it does not involve raising deposits or offering investment instruments to the public.
Certification of fintech companies in the Czech Republic
Speaking about the activities of fintech companies registered in the EU or EEA countries, they can provide regulated services in the Czech Republic with an appropriate passport without the need to obtain a Czech license or authorization. It should be noted that an amendment to the Law on Obligations in the Capital Market is being prepared, the adoption of which means that the provision of investment services in the Czech Republic by certified companies (without creating a local branch) will be possible only on a temporary basis.
Anti-bribery and money laundering
Czech law states that all fintech companies that provide digital currency services in the Czech Republic must comply with the AML principles. Moreover, institutions such as banks and investment companies, as well as other businesses, must also comply with the rules related to the conduct of KYC procedures.
AI technologies, blockchain and cryptoassets
- Artificial Intelligence
In the Czech Republic, there is no special legislation regarding the use of AI in business. Licenses and permits are issued in accordance with the regulations under which the robot's activity falls.
For example, if the program processes any personal information of users to compile a catalog of chatbot phrases, the general requirements arising from the GDPR and the relevant national legislation on the protection of personal data will apply.
With regard to the use of blockchain technology in business, there are also no specific regulations or regulatory principles in the Czech Republic, with the exception of the general principles for the protection of personal information set out in the GDPR.
- Digital assets
The regulation of cryptoassets in the Czech Republic comes down to the rules by which the activities for the provision of payment services are regulated: the Law on Payment Services, as well as the provisions on AML.
In principle, the same applies to cryptocurrency exchanges - there is no special regulation (unless such an exchange trades derivatives (derivatives) of cryptoassets, or any payment services are involved), so it is enough to obtain a trading license.
- ICO in the Czech Republic
If you plan to register a company for ICO in the Czech Republic, such activities will most likely be perceived by the regulator as collective investment schemes and, accordingly, will require obtaining a license for investment activities.
- Information protection and cybersecurity
In the context of the work of fintech companies, there are no special rules according to which the processing of personal data would be regulated. GDPR and national Personal Data Processing Law apply.
- IP protection in the Czech Republic
Copyright is the main form of legal protection in fintech, as technology is usually presented in the form of various kinds of software and computer code. Copyright protection in the Czech Republic is informal. In addition, software can be protected as a trade secret, the protection of which is also not subject to any formal registration. In terms of branding and design, they are protected by various other provisions.
Interestingly, the protection of software in the Czech Republic can be provided by forms of protection of industrial property rights (i.e. require official registration).
The protection of trademarks in the Czech Republic, as well as the names of programs, is ensured by the relevant Trademark Law.
- IP development by employees or contractors
The IP right in relation to software that was developed by an employee as part of his work for the company belongs to the company, unless otherwise agreed in advance. The same rule applies to contractors if they create programs, databases, etc.
- IP Co-ownership
If software development is carried out by a group of individuals, protection provides equal rights for all developers. If a co-author unreasonably refuses to provide his consent, which is necessary for the implementation of the protection of intellectual property rights, other co-authors may go to court. Each of the creators has an equal right to defend their rights and to fight infringements or alleged infringements that affect their IP.
Legal brand protection
TM protection in the Czech Republic is provided in two ways:
- informally - by provisions on unfair competition, and
- formally - by registering a trademark in accordance with the law.
Registration of TM in the Czech Republic must be carried out at the Industrial Property Office, or at EUIPO at the EU level.
When choosing a name for a company or product, you must understand that its registration is possible only if it differs from the names of existing companies / products. The same applies to the registration of domain names in the Czech Republic.
Please note that all information in the article has been prepared and published for informative purposes and should not be taken as legal advice. In the event that the reader is puzzled by any questions related to the topic of the article, there is an opportunity to discuss them with the IQ Decision UK specialists during a personal consultation on fintech business in the Czech Republic.
In the event that the reader is puzzled by any questions related to the topic of the article, there is an opportunity to discuss them with the IQ Decision UK specialists during a personal consultation on fintech business in the Czech Republic.
Please note that our company specialists provide accompanying services at all stages of registration of a fintech company in Europe.
You can find out more detailed information about our services, as well as sign up for a legal consultation on the regulation of fintech in the Czech Republic by contacting us directly using the contacts indicated in the form below.