The IT jurisdiction of Estonia is considered as the mildest of its kind with facilitated conditions for obtaining a cryptocurrency exchange license for start-ups in the blockchain technology industry. In other words, a so-called crypto-license is an official permission to conduct a regulated cryptocurrency business. Several new cryptocurrency and trading platforms are created every week, and a significant part of them had been licensed in Estonia, since the local order presupposes a quicker process of obtaining a crypto-license than, for example, in the jurisdictions of other countries. A team of experts from Company in Estonia OÜ will accompany your project through all the necessary procedures in the preparation of documents and obtaining the legal permission from the authorities to launch your crypto-business.
The National Financial Intelligence Unit (FIU, or Rahapesu Andmebüroo, RAB) is the local government institution responsible for granting a crypto-license in Estonia. For activities in the field of crypto services, in accordance with the Law on the Prevention of Money Laundering and the Financing of Terrorism, is required a license called a single cryptocurrency license. Two different services fall into this category: a virtual currency wallet service provider and a virtual currency exchanger (see I and II). Previously, they required two different licenses, which are now merged into the Virtual Currency Service Provider License.
- Crypto-wallets and custodian services
- The first category of services includes the generation and storage of encrypted customer keys.
- The second category of services is the cryptocurrency exchange for fiat money or vice versa, or cryptocurrency for another cryptocurrency.
Hundreds of crypto-companies conduct their business from Estonia for a number of the following reasons that are undeniably profitable for doing business across Europe.
First, an Estonian crypto-company can benefit from fair and accurate regulation. The Estonian AML Act and related provisions establish rules that give the licensed company the ability to know what is permitted, what is prohibited, and in general how they must act to comply and remain in compliance with the law.
In addition, Estonia provides a favorable business environment. Almost all aspects of establishing and running an Estonian company are carried out completely online from anywhere in the world thanks to the e-Residency programme. According to the recent data it became clear that Estonian e-Residents from all over the world generate over 1 billion euros of economic activity through their Estonian companies.
In addition, there is no corporate tax in Estonia. Instead, only distributed profits are usually subject to 20% corporate income tax of 20/80 of the net profit distribution. In other words, under the Estonian taxation scheme, a company benefits from the opportunity to reinvest its profits tax-free.
Cryptocurrency wallets are digital offline and online tools based on public-key cryptography used to securely send and receive cryptocurrency over the network.
There are two types of wallets: cold (offline wallets — such as hardware wallets, paper wallets for cryptocurrency) and hot (online wallets) storage. The difference is that cold wallets store digital coins offline, without Internet access; while hot wallets are mainly used to store small amounts or store on a daily basis. Hot storage wallets include conventional and multicurrency wallets for cryptocurrency.
A single cryptocurrency license in Estonia allows to provide cryptocurrency wallet services for both cold and hot storage.
- Contact details of the business owner (phone number, e-mail and mailing address), a CV.
- Address of the provision of services and web page address.
- Name and contact details of the person responsible for the offer.
- Name, personal code (if not available — date of birth), place of birth and residence address of the real beneficiary of the company.
- Procedural rules and internal control regulations developed according to Articles 29 and 30 of the Money Laundering and Terrorist Financing Prevention Act, and in case of persons with special responsibilities specified in Article 6 of the International Sanctions Act, procedural rules developed according to Section 6 of the International Sanctions Act, and the procedure for verifying their implementation.
- Name, personal code (if not available — date of birth), place of birth, citizenship, residence address, position and contact details of the contact person specified in Part 3, Article 29 or Part 4, Article 29 of the Money Laundering and Terrorist Financing Prevention Act.
- Name, personal code (if not available — date of birth), place of birth, citizenship, residence address, position and contact details of the person responsible for applying international financial sanctions, as determined by the business owner according to Part 9, Article 13.
- If the business owner, the Board member, the procurator, the real beneficiary or the proprietor is a citizen of a foreign country or if the business owner is a foreign person offering services, it is necessary to submit a statement from the penalty register in one’s country of origin or an equivalent document issued by a judicial or administrative authority confirming the absence of penalties for crimes committed against government authorities, money laundering crimes or another deliberate crimes no earlier than three months ago and certified by a notary or in another similar way and legalised or approved by the certificate replacing legalisation (Apostille), unless otherwise provided by an international treaty.
In accordance with the Money Laundering and Terrorist Financing Prevention Act, amendments have been made to establish stricter boundaries for companies applying for an Estonian crypto-license.
- Among such amendments, the minimum share capital of a crypto-company was increased from 2,500 EUR to 12,000 EUR and now its full payment before applying for a crypto-license is mandatory. This amount can then be used to finance the future activities of the company.
- It has also changed that an IBAN account is now required before submitting an application. Estonian banks do not accept applications for opening a bank account from crypto-companies, but it is also true that an Estonian has the right to open an account with the European Electronic Money Institution.
- One of the major novelties was the fact that from now on the Board and place of business must be located in Estonia. Also, the presence of a company director of an Estonian citizenship has become mandatory.
- The requirements for KYC/AML officers have significantly toughened. After applying for a crypto-license, the KYC/AML officer will have to undergo an interview with the FIU to confirm their skills and suitability for the position.
- Apart from that, the state fee payable to the Estonian government has been increased from 345 EUR to an investment of 3,300 EUR.
Specialists of Company in Estonia OÜ will be glad to assist you in getting a cryptocurrency license. The assistance includes making the list of necessary documents, help in developing procedural rules of the company, translation of documents into Estonian and support throughout the licensing process.