The founder's question is usually "which licence do I need". For a firm selling evaluations on simulated accounts, the more useful question is which set of rules applies to selling a paid consumer product with a conditional payout, and which country's authorities will read your terms when a customer complains.
Start from what the business actually is
A typical firm charges a fee for an evaluation on a demo environment, applies rules to the results, and pays a share of simulated profit to those who pass. No client money is held for trading. No third party order reaches a market on the customer's behalf. In many regimes that combination sits outside investment services licensing, which is why the sector grew without licences.
That is not the same as unregulated. Consumer protection law, advertising standards, distance selling and refund rules, data protection and anti money laundering obligations can all apply. Where a firm routes customer orders to a live market, or lets customers trade real capital, the analysis changes and investment services rules come into scope. Supervisors in several markets have looked at the sector, and the direction of travel is covered in prop firm regulation in 2026 and in the MiFID question for prop firms. Take your own legal advice on your model before you pick a country.
What drives the incorporation decision
Four things, in this order.
First, payments. This is the binding constraint for almost every firm. Card acquirers underwrite the entity, and the jurisdiction of incorporation sits near the top of the risk assessment alongside the merchant category, refund policy and chargeback history. An entity in a country with a recognised company register, audited filings and a banking system that answers requests is easier to underwrite than one in a jurisdiction that reads as opaque. The chain is described in prop firm payment acceptance.
Second, where your customers are. Consumer and advertising rules follow the customer. Selling into a strictly supervised market from an entity that has never engaged with it does not remove the rules, it removes your defence when they are applied.
Third, banking. Operating accounts follow risk appetite, and the appetite depends on the country of incorporation, the ownership chain and whether the business is understood. The mechanism is in correspondent banking de-risking, which is why an entity in a heightened monitoring jurisdiction has fewer options regardless of how clean the firm is.
Fourth, tax and substance, which are questions for your accountants and increasingly involve real presence rather than a registered office, as substance requirements sets out.
Why firms end up with more than one entity
Splitting the business is common and is not by itself a red flag. The usual shapes: an operating entity that contracts customers and holds the merchant agreement, incorporated where payments work; a technology or intellectual property entity holding the platform and brand; and sometimes a separate entity for the trading and payout side. A holding company sits above, as described in group structure and holding companies.
The reason to keep the customer contracting entity and the payout entity distinct is operational rather than clever: they have different counterparty profiles, and a payment provider that underwrites inbound card volume is not the same provider that suits outbound mass payouts.
Structures that exist to obscure ownership fail. Nominee directors, layered holdings and jurisdictions chosen for secrecy all raise the shell company flags every onboarding team is trained on, and the file is declined for opacity rather than for anything you did. Build the structure so it explains itself in one diagram.
How each counterparty reads your entity
| Counterparty | What they check |
|---|---|
| Card acquirer | Country of incorporation, merchant category, refund and cancellation terms, chargeback profile, beneficial owners |
| Operating bank | Ownership chain, source of funds, customer countries, whether the business model is one they bank at all |
| Payout provider | Destination countries, sanctions exposure, whether payouts are consumer payments or something else |
| Platform vendor | Which entity signs, which regime it sits in, and whether the client base creates risk for them |
| Ad platform | Advertiser identity, landing page claims, and whether the product falls in a restricted financial category |
Ad platforms deserve particular attention because acquisition depends on them. Financial product policies are published, they change, and they are enforced by review against the advertiser entity and the page it points to. Claims about earnings are the fastest route to a rejection, and the copy rules that follow are the same ones a consumer regulator would apply.
The decision I would defend
Incorporate where a bank and an acquirer will actually onboard you, where the company register is credible, and where you can put real people if substance is questioned. Accept a higher running cost for that. Write terms that survive being read by a consumer authority in your largest customer market, and treat the payout promise as the part that gets tested, which is why the legal setup of a prop firm starts with the terms rather than the country.
Firms that pick the cheapest registry first and discover the payments problem second spend the following year re incorporating, migrating customers and explaining the move to underwriters who now have two entities to ask about. The technology can move with you, since the CRM and evaluation layer is not tied to a jurisdiction. The banking relationships cannot.
"Pick the country your acquirer will accept, then build the company. Doing it the other way round means paying for the same setup twice."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- Selling evaluations on simulated accounts often sits outside investment services rules, but consumer, advertising, data and AML obligations still apply.
- Payments are the binding constraint. Acquirers weigh country of incorporation alongside merchant category, refunds and chargeback profile.
- Multiple entities are normal, splitting customer contracting, technology and payouts, provided the structure is transparent in one diagram.
- Structures built for secrecy trigger shell company checks and fail onboarding for opacity, whatever the underlying business looks like.
Frequently Asked Questions
Does a prop firm need a financial licence?
It depends on the model and the country. Evaluations on simulated accounts frequently fall outside investment services rules, while routing real orders or handling client capital changes the analysis. Get local legal advice on your specific model.
Why do prop firms use more than one entity?
Because inbound card acceptance, technology ownership and outbound payouts have different counterparty and risk profiles, and separating them makes each file easier to underwrite.
Can I incorporate anywhere and still take cards?
No. Acquirers assess jurisdiction risk directly, and some countries narrow your options to providers with pricing and reserve terms that change your unit economics.
About the Author
Roman Onta is an Executive Director at SINGUARD. He builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals side by side with his brother Alex Onta, and he helped on the design of eTrader, the division Alex built and leads. His ground is worldwide payment processing, AML compliance and the corporate structures brokers are built on, work the two of them carry together, shaped by executive roles in the UAE and international corporates. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.