In this article, we will review a standard case for our incorporation department — the opening of a corporate account on a cryptocurrency exchange. Although this process is routine for us, this time it took more than three months, which is unusual for such operations.
Compliance specifics
On one side, we had the well-known cryptocurrency exchange Kraken, and on the other — a newly established VASP (Virtual Asset Service Provider) in Lithuania with a beneficiary and director who recently left Ukraine and decided to start a business in Europe.
Initially, everything followed the standard procedure: submitting the application and completing the necessary documents to open the corporate account. The exchange responded with a slight delay, explaining that due to a high influx of clients, processing the application could take longer. However, about a month into the process, the exchange’s compliance team began to not just do their job but to excel at it, investigating the smallest details about the client.
The client was a Ukrainian citizen who, in 2014, fled Donetsk due to Russian aggression, continuing his work as an individual entrepreneur on the Ukraine-controlled territory. During the full-scale invasion, he left with his family and decided to start a business in Europe using his savings. This is a typical situation for many Ukrainians forced to leave their homes in 2022. Our company assisted the client with incorporating the company, and our incorporation department handled the opening of bank and exchange accounts.
Returning to the process, we will explain why this case is important for our practice. The purpose of this article is to convey that Ukrainian citizens living in Europe are not limited in their rights and enjoy the same freedoms as ordinary Europeans. Throughout the verification and compliance process, our company’s lawyers patiently explained for nearly two months to Kraken’s compliance department why the company’s beneficial owner, a Ukrainian citizen living in Poland, is no longer connected with the occupied territories. They provided documentation confirming that his earned funds were legally sourced, notarized, and translated into English, and had no relation to the occupied territories of Ukraine. Additionally, they demonstrated that he resides legally in Poland and complies with all EU laws.
Legal justification of the client’s status
Particular attention should be paid to the last point. Even after sending all the available documents, Kraken representatives insisted on obtaining a residence permit as the only document they considered sufficient to confirm the Ukrainian’s legal residence in Poland. Our lawyer prepared an extensive letter with a legal justification of the order and grounds for the legal stay of a Ukrainian citizen in the EU, along with an analysis of Polish national legislation on the regulation of Ukrainian refugees’ status in Poland.
This letter explained that, in accordance with the Law of March 12, 2022, “On Assistance to Citizens of Ukraine in Connection with the Armed Conflict on the Territory of this State” (with subsequent amendments), the Polish legislature created special legal conditions for the legal stay of Ukrainian citizens who were forced to leave their country due to the war. Specifically, under this Law, Ukrainian citizens who entered Poland from Ukraine after February 24, 2022, and entered legally, have the right to stay legally in Poland for 18 months from that date.
The letter emphasized that since the law’s adoption, the Polish legislature has made several amendments, taking into account new circumstances, such as the EU Council’s decision to extend temporary protection for displaced persons from Ukraine (Decision 2023/2409 of October 19, 2023). As a result, these changes were enshrined in the Law of April 2, 2024, which extended the period of legal stay for Ukrainian citizens in Poland until September 30, 2025.
Our lawyer explained that, based on these laws, our client has the right to legally stay in Poland without the need for a residence permit. This is confirmed by the fact that he obtained PESEL ukr, uses bank accounts in Poland, has a housing rental agreement, and pays utility bills, all of which have already been provided in the relevant documents. He is also willing to provide additional proof of his stay in Poland along with his children’s documents, if necessary.
The letter also states that Polish law does not require a residence permit for Ukrainian citizens who left after February 24, 2022. The client is ready to submit any necessary documents immediately if the legislation changes and such a need arises. However, he emphasizes that a residence permit is not mandatory for this category of individuals.
Of course, we have not provided the full legal analysis that was submitted to Kraken in this article, only the key points of this case. But we assure readers that after three long months, the verification was finally completed, and the client has now begun their operational activities. All thanks to the patience shown by all parties involved in this process and the thorough legal analysis provided by our lawyers.
For readers
Remember, Ukrainian citizens legally residing in the EU are not restricted in their rights and have full rights to engage in legitimate business on par with EU citizens. If you encounter difficulties opening accounts for your company or are unsure about successfully passing compliance procedures, you can seek assistance from our company’s lawyers, as we work to ensure you can keep working.
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Manimama Law Firm provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.
