What You Need to Launch a Crypto Lending Business
A crypto-backed lending business needs five interlocking components: an operating entity in a jurisdiction whose regime actually covers lending, a licence or registration under that regime, a collateral custody architecture with segregated wallets and a loan-to-value engine, fiat disbursement and repayment rails, and a compliance stack spanning AML, sanctions screening of collateral, and the consumer-credit perimeter where borrowers are retail. And the regime and entity decisions are strictly sequential; the build streams run in parallel behind them.
Regime comes first because it is the narrowest question. Unlike exchange or custody services, lending has no MiCA authorisation class to passport: MiCA authorises ten crypto-asset services and lending is not among them, so no CASP licence covers a lending book.[5] Jurisdictions that do name lending as a licensable digital-asset activity form a short list, and four of them are covered by the partner network: Dubai, Georgia, Bermuda, and Antigua and Barbuda.
Custody architecture is the second structural choice. Borrower collateral must sit in segregated wallets with documented control, an LTV monitoring engine, and a liquidation waterfall the borrower agreed to in the loan terms. A desk that cannot evidence segregation and liquidation mechanics will not pass banking due diligence, and in the licensed regimes it will not pass the regulator either.
Infrastructure Checklist
| Component | What It Involves | Typical Timeline |
|---|---|---|
| Operating entity | Registered company in the licensing jurisdiction; holds the loan book, contracts with borrowers and vendors | 1 to 4 weeks |
| Licence / registration | VARA licence, NBG VASP registration, DABA licence, or FSRC DAB licence depending on route | 2 to 4 months (Georgia, Antigua) to 4 to 18 months (Dubai) |
| Collateral custody | Segregated wallets, key management, LTV monitoring, liquidation waterfall documented in loan terms | 4 to 8 weeks |
| Fiat rails | Operating accounts, disbursement and repayment rails, liquidation off-ramp | 6 to 12 weeks (parallel) |
| Lending engine and risk controls | Origination flow, margin-call communications, rate logic, default handling | 6 to 12 weeks (parallel) |
| Compliance stack | KYC, sanctions screening of collateral inflows, transaction monitoring, consumer-credit perimeter where retail | 4 to 8 weeks initial, then continuous |
Sequencing follows dependency. Before the licensing file, the custody file, or any bank application can be lodged, the entity must exist. Because the licensing route determines what the custody and compliance files must contain, regime selection precedes both. Banking, custody build-out, and the lending engine then run in parallel; banking is the longest-pole item, and pre-qualification through the partner network starts alongside formation, not after licensing.
Choosing the Right Jurisdiction
Jurisdiction choice determines whether the lending activity is licensable at all, the capital and deposit requirements, the tax treatment of interest income, the retail perimeter, and the banking options. For crypto lending the field is unusually narrow: most regimes regulate exchange and custody but stay silent on lending, so the comparison below covers the four network jurisdictions whose frameworks name lending or borrowing as a regulated activity.
Jurisdiction Comparison
| Factor | Dubai (VARA) | Georgia | Bermuda | Antigua & Barbuda |
|---|---|---|---|---|
| Regime | VARA VASP licence with an explicit Lending and Borrowing category | NBG VASP registration; lending among seven regulated activities | BMA DABA licence (Class T / M / F) | FSRC Digital Assets Business licence (activity-based) with sandbox option |
| Minimum capital | AED 100,000 floor, rising by activity tier≈ $27K+ | None statutory; NBG assesses financial soundness case-by-case | USD 100,000 baseline net assets (Class M, F); USD 10,000 (Class T) | No fixed share capital; statutory deposit scaled by activity and client assets |
| Year-1 cost | AED 1.5m to 10m all-in for a full VARA build≈ $410K–2.7M | USD 15,000 to 40,000 all-in | USD 600,000 to 1,500,000 (Class F) | Roughly USD 30,000 to 60,000+ excluding the locked statutory deposit |
| Realistic timeline | 4 to 18 months | 2 to 4 months | 6 to 12 months | 2 to 4 months |
| Corporate tax | 9% above AED 375k profit; 0% on Qualifying Income in free zones≈ $100K | 0% on retained profits; 15% on distribution | 0%; 15% for in-scope large groups under the Corporate Income Tax Act 2023 | 25% headline under a territorial system |
| Retail lending | Mixed: retail access gated by product and marketing rules | Permitted | Permitted | Permitted |
| FATF standing | Clear | Clear | Clear | Clear |
Choose Dubai if institutional credibility and MENA or global non-EU distribution drive the business case, and the budget carries a full VARA build. VARA is the only regime of the four with a purpose-built Lending and Borrowing licence category, which means the loan book, the collateral mechanics, and the margin-call process are assessed under rules written for lending rather than adapted from exchange supervision. See the full Dubai crypto licensing guide.
Choose Georgia if the desk is cost-sensitive and the borrower base sits in the CIS, Turkey, MENA, or the Caucasus. Its NBG VASP registration names lending among the seven regulated activities, carries no statutory minimum capital, and completes in 2 to 4 months at a Year-1 all-in cost of USD 15,000 to 40,000; the distributed-profits tax model leaves retained interest income untaxed. Full detail: the Georgia crypto licensing guide.
Choose Bermuda if the desk is institutional-grade and the counterparties expect a mature, internationally respected supervisor. Under the Digital Asset Business Act 2018 lending sits within the defined activities, the BMA's class system (T, M, F) lets a desk scale supervision with the book, and the 0% corporate rate holds below the Corporate Income Tax Act 2023 thresholds. Year-1 costs of USD 600,000 to 1.5 million price it for funded desks. See the full Bermuda crypto licensing guide.
Choose Antigua and Barbuda if the desk wants an early, activity-flexible, English-language regime at moderate cost, with a renewable sandbox licence available for a staged launch. Licensing under the Digital Assets Business Act 2020 runs on an activity basis, with a statutory deposit scaled to the book rather than a fixed capital floor. More detail sits in the Antigua and Barbuda crypto licensing guide.
Setting Up Your Company
Company formation is the first operational step because the licensing file, the custody arrangement, and every bank application require a registered entity. One formation mistake is specific to lending: incorporating the loan-book entity in a jurisdiction the founders like for tax, then discovering the lending regime they need sits elsewhere. Unlike a holding company, a loan-book entity cannot be cheaply re-domiciled once positions are open.
Formation by Jurisdiction
| Jurisdiction | Entity type | Formation cost | Timeline | Min. capital |
|---|---|---|---|---|
| Dubai | Free Zone Company (FZCO / FZE) | AED 30,000 to 55,000 Year-1 all-in≈ $8,200–15K | Licence in 3 to 5 working days; operational with visa and bank account in 4 to 8 weeks | None statutory for most free zones; VARA capital applies at licensing |
| Georgia | LLC | USD 1,500 to 3,500 all-in | Registration in 1 business day; operational readiness 1 to 4 weeks | None; nominal share capital permitted |
| Bermuda | Exempted Company | USD 8,000 to 20,000 all-in | 3 to 7 business days (BMA ownership approval gates the timeline) | None to incorporate; DABA net-asset requirements apply at licensing |
| Antigua & Barbuda | International Business Corporation (IBC) | USD 1,300 to 3,100 statutory | 1 to 2 weeks via licensed registered agent | None; FSRC statutory deposit applies at licensing |
Formation figures are Year-1 all-in ranges as of and exclude licensing. In all four jurisdictions the entity can be formed before the licensing file is complete, and should be: the entity name goes on every subsequent document, from the custody agreement to the bank application.
Licensing Requirements
Each regime carries its own licence type: a VARA VASP licence under the Lending and Borrowing category in Dubai, an NBG VASP registration in Georgia, a DABA Class T, M, or F licence in Bermuda, and an activity-based Digital Assets Business licence in Antigua and Barbuda. Capital floors run from none (Georgia) through AED 100,000 (Dubai, rising by tier) to USD 100,000 baseline net assets (Bermuda Class M and F).
Dubai (VARA). Within VARA's activity model, under Dubai Law No. 4 of 2022, the Lending and Borrowing category sits alongside advisory, broker-dealer, custody, exchange, management, transfer, and issuance.[1] Approval is a two-stage process running 4 to 18 months, and the application, supervision, and capital numbers scale by activity. A lending desk that also takes custody of collateral needs the custody activity as well; VARA prices each additional activity separately.
Georgia (NBG). Registration rather than licence: the National Bank of Georgia registers VASPs under Decree N94/04 and supervises lending as one of seven regulated activities.[2] There is no statutory capital floor; the NBG assesses financial soundness case-by-case. AML/CFT documentation, key-person fitness, and the custody arrangement form the centre of the file.
Bermuda (BMA). Bermuda's Digital Asset Business Act 2018 defines the licensable activities and the BMA's class system stages supervision: Class T for pilots, Class M for modified supervision, Class F for full licence.[3] Operationally, the Digital Asset Business Code of Practice sets the bar: custody, client disclosure, and risk management, which for a lending desk means documented LTV and liquidation mechanics.
Antigua and Barbuda (FSRC). Antigua and Barbuda's Digital Assets Business Act 2020 (as amended) licenses by activity, with a statutory deposit scaled to activity and client assets rather than a fixed capital floor, and a renewable sandbox licence for staged launches.[4] Annual licence fees run EC$20,000 to 30,000 for most categories.
Lending inside the EU: the MiCA gap
MiCA's ten authorised services cover exchange, custody, transfer, advice, portfolio management, and platform operation; lending and borrowing are outside the perimeter, and Article 142(2) instructs the Commission to assess the development of markets in crypto-asset lending and borrowing in its review.[5] An EU entity can lend against crypto collateral today, but it does so under national financial, consumer-credit, and AML law, without a passport, and with member-state-by-member-state variation.
For most builds the practical answer is a licensed non-EU entity plus a per-market analysis of borrower-side rules. See the crypto licensing hub for the full regime map.
Banking
Banks read a crypto lending desk as double exposure: a crypto-native counterparty plus a credit business. Collateral volatility, liquidation-driven flow spikes, and source-of-funds questions on repaid principal push primary clearing banks toward refusal; through the partner network, operating and rail accounts typically onboard in 6 to 12 weeks, longer than for a licensed exchange because the diligence is direct.
In practice the path is a multi-institution architecture. An EU-licensed EMI carries operating flows and payroll; a custody-grade institution in a digital-asset-aware jurisdiction holds collateral under the segregation the regulator and the loan terms require; disbursement rails match the borrowers' currencies. Three settlement components are specific to lending: the disbursement off-ramp (loan principal out, often same-day against posted collateral), the repayment on-ramp (principal and interest in, with source-of-funds evidence attached), and the liquidation settlement leg (collateral sold, proceeds converted and reconciled against the loan). Each leg needs its own institution answer before origination starts.
Ongoing Compliance
Compliance is a permanent operating expense, not a licensing one-off. Annual ranges run from USD 8,000 to 25,000 on the Georgia registration route (accounting, registered office, AML/CFT maintenance) to USD 250,000 to 1.2 million for a Bermuda Class F licensee; Antigua and Barbuda sits between, with annual licence fees of EC$20,000 to 30,000 plus a senior representative, compliance officer, audit, and principal office.
Specific to a lending book: sanctions and provenance screening of collateral inflows before acceptance, transaction monitoring across disbursement and repayment legs, Travel Rule data on qualifying transfers, LTV monitoring with auditable margin-call records, liquidation disclosures matching the loan terms, and, where borrowers are retail, the conduct and affordability rules of each borrower market. Regimes with staged classes (Bermuda) or activity pricing (Dubai, Antigua) re-price as the book grows, so the compliance budget scales with origination volume.
On the watchlist: the Commission's MiCA review under Article 142 must assess crypto-asset lending and borrowing markets, and an EU authorisation class for lending would change the strategy for any EU-facing book.[5] Jurisdiction pages carry the per-regime detail.
Realistic Timeline and Costs
End-to-end, a crypto lending business reaches first origination in 3 to 9 months on the registration routes (Georgia, Antigua and Barbuda) and 6 to 18 months on the licensed routes (Bermuda, Dubai). Custody build-out, banking, and the lending engine run in parallel with the licensing file; banking is the usual critical path.
Cost Breakdown
| Phase | Timeline | Notes | Cost Range |
|---|---|---|---|
| Formation & setup | 1 to 4 weeks | Georgia and Antigua at the low end; Dubai FZCO (AED 30k to 55k) and Bermuda at the top | USD 1,500 to 15,000 |
| Licensing / registration | 2 to 18 months | Georgia registration: USD 10k to 25k advisory + state fee; Antigua: fees + scaled deposit; Bermuda Class F and Dubai VARA carry six-figure builds | USD 10,000 to 600,000+ |
| Banking & custody | 6 to 12 weeks (parallel) | EMI operating accounts, custody-grade collateral arrangement, disbursement rails; excludes locked deposits | USD 10,000 to 60,000 |
| Lending engine & go-live | 6 to 12 weeks (parallel) | Origination flow, LTV monitoring, liquidation waterfall, margin-call communications, compliance tooling | USD 15,000 to 120,000 |
| Year-1 total | 3 to 18 months | Lean Georgia build at the floor; full Dubai VARA institutional build at the ceiling | USD 25,000 to 2.7 million |
Figures are Year-1 all-in ranges as of , in USD unless stated, and exclude paid-in capital, locked statutory deposits, and loan-book funding itself. Ongoing Year-2 costs drop to the compliance ranges in the previous section plus banking and custody fees.
Frequently Asked Questions
Costs & Timeline
Jagelski & Partners scopes crypto lending builds from roughly USD 15,000 to USD 40,000 for Year 1 on the Georgia registration route (formation, NBG VASP registration, custody and banking setup, compliance documentation) up to USD 362,000 to USD 2.15 million for a Dubai VARA licensed build, with Bermuda DABA Class F builds at USD 377,000 to USD 1.46 million and Antigua and Barbuda at USD 34,100 to 64,100, in every case before the statutory deposit, which in Antigua runs a further USD 18,500 to 111,000 and is held rather than spent.
The spread is driven by the licensing route, not the technology: the lending engine and custody stack cost broadly the same everywhere. Figures as of .
Operational readiness in 3 to 9 months on the registration routes: Georgia’s NBG VASP registration and Antigua and Barbuda’s licence each run 2 to 4 months, with banking, custody, and the lending engine built in parallel. A Bermuda DABA licence runs 6 to 12 months and a Dubai VARA licence 4 to 18 months.
The critical-path item on every route is banking: operating and rail accounts typically onboard in 6 to 12 weeks, and Jagelski & Partners pre-qualifies the banking before the licensing file is submitted.
Licensing
It depends on where the lending entity is domiciled and who the borrowers are. Four regimes covered by the Jagelski & Partners network treat lending as a licensable digital-asset activity: Dubai’s VARA regime carries an explicit Lending and Borrowing category, Georgia’s NBG VASP registration names lending among seven regulated activities, Bermuda’s Digital Asset Business Act 2018 captures it within the defined DABA activities, and Antigua and Barbuda’s Digital Assets Business Act 2020 licenses it on an activity basis.
In the EU there is no equivalent: MiCA authorises ten crypto-asset services and lending is not among them, so the activity falls to national financial, consumer-credit, and anti-money-laundering law.
No. MiCA (Regulation (EU) 2023/1114) authorises ten crypto-asset services and lending is not among them, so no CASP licence covers a lending book. In most EU jurisdictions there is no dedicated authorisation for crypto-collateralised lending at all, which leaves the activity governed by general financial, consumer-credit, and money-laundering law rather than a purpose-built regime.
Article 142 of MiCA requires the European Commission to assess the development of markets in crypto-asset lending and borrowing in its review report, so an EU regime may follow. Until it does, an EU-facing lending desk needs a per-market perimeter analysis, not a passport.
There is no single best jurisdiction; the choice follows the borrower base and the capital available. Dubai is the default where institutional credibility and MENA or global non-EU distribution matter, and it is the only regime of the four with a purpose-built Lending and Borrowing licence category. Georgia is the cost-sensitive route with a 2 to 4 month registration and 0% tax on retained profits.
Bermuda fits institutional-grade desks that can carry USD 600,000+ Year-1 costs for a mature supervisor. Antigua and Barbuda is the early activity-flexible English-language regime with a sandbox option. Jagelski & Partners scopes the fit in the first conversation.
Banking & Operations
Regime-dependent. Georgia, Bermuda, and Antigua and Barbuda permit retail participation under their digital-asset frameworks, while Dubai’s VARA regime takes a mixed position with retail access gated by product and marketing rules. The harder constraint is usually the borrower’s own jurisdiction: lending to consumers in the EU can trigger national consumer-credit licensing and conduct rules that apply regardless of where the lender is domiciled.
A retail lending book therefore needs a marketing-perimeter analysis per target market before origination starts, and several builds deliberately restrict Phase 1 to professional and corporate borrowers.
Through a multi-institution architecture, not a single-bank application. Banks read a crypto lending desk as double exposure: a crypto-native counterparty plus a credit business, with collateral volatility and liquidation-driven flows on top. The practical stack combines an EU-licensed Electronic Money Institution for operating flows, a custody-grade institution in a digital-asset-aware jurisdiction for collateral, and disbursement rails matched to the borrowers’ currencies.
Jagelski & Partners pre-qualifies the stack across the partner network before the licensing file is submitted; operating and rail accounts typically onboard in 6 to 12 weeks.
Start Your Crypto Lending Assessment
Book a strategy call. Jagelski & Partners scopes the licensing route, entity setup, collateral custody, banking stack, and compliance perimeter for crypto lending businesses across four regimes, with operational readiness in 3 to 9 months on the registration routes and 6 to 18 months on the licensed routes.
Initial consultations are free · Response within 24 hours
References
Show all references
- Government of Dubai, Dubai Law No. 4 of 2022 Concerning the Regulation of Virtual Assets in the Emirate of Dubai, rulebooks.vara.ae, accessed .
- National Bank of Georgia, Rule on Virtual Asset Service Provider Registration at the National Bank of Georgia (Decree N94/04, effective 1 July 2023), nbg.gov.ge, accessed .
- Bermuda Monetary Authority, Digital Asset Business Act 2018 (consolidated), bma.bm, accessed .
- Government of Antigua and Barbuda, Digital Assets Business Act 2020 (No. 16 of 2020), laws.gov.ag, accessed .
- European Parliament and Council, Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA), Article 3(1)(16) service list and Article 142(2) review clause, eur-lex.europa.eu, accessed .
- Bermuda Monetary Authority, Digital Asset Business Code of Practice, bma.bm, accessed .