In this blog post we check out the processes and requirements of obtaining two licenses in Estonia which permit companies to do crypto business. The first one permits you to exchange fiat to crypto and crypto to fiat. Usually, crypto to crypto transactions don’t require a license.
The second license lets you provide e-wallet services for virtual currencies. You can generate whilst encrypted keys around the behalf with the client, i.e providing custodial services of the required credentials to get into the virtual currencies.
Whether your ICO needs any of these licenses depends for the concrete token offering as well as the business structure. In our experience, most from the ICOs do not require these licenses. Sometimes, the ICO projects find the licenses because it provides social credibility helping with marketing, or owning an e-wallet or even an exchange is part of the business plan later on.
Two licenses are issued through the Estonian Financial Intelligence Unit (FIU, or RAB in Estonian). The FIU may will not issue the crypto license in Estonia in case the provided documentation is insufficient, the related persons possess a criminal history record, or even the provided criminal convictions check won’t adhere to the requirements with the Estonian FIU.
Additional complexity could be created in the event the Estonian company applying for the license is belonging to another legal entity. If this legal entity can’t provide a criminal background paper, as a result paper won’t appear in the jurisdiction with the company, then this FIU will refuse to issue the license. There is one alternative in this case – once the criminal record can’t be obtained for a corporation, it could be sufficient if your liable official from the registration country offers a statement, which proves the corporation has no criminal record.
Though the business holding the cryptocurrency licenses is recognized as an economic institution, there isn’t any special tax or reporting requirements, nor cautious special capital requirements. The FIU will make inquiries and also you need to provide them specifics of your activities.
Additionally, in case you find the licenses, but we’ll n’t have any business were only available in half a year time, then a FIU can revoke the licenses.
To obtain the crypto licenses you’ll need to have a company and offer the mandatory documentation. It’s strongly advised to subscribe an Estonian company, since the FIU is not very interested in issuing licenses to foreign entities, and yes it’s a good deal smoother process with the Estonian entity. Foreign entities are certainly not excluded, though, and there is one or two companies, which usually are not registered in Estonia, that have obtained the licenses.
Together with the corporation registration, your client should already start the whole process of obtaining the criminal record documents for all your shareholders, board members, the compliance officer (responsible person) and UBOs (ultimate beneficiary owners). The criminal history ought to be in English and certified with the apostille. The documents can’t be older than three months.
We also ask the customer’s compliance officer (responsible person) to offer an university diploma (recommended is diploma in finance, economics, computer science or law) and a resume.
Together by having an application for the FIU you will must present the KYC/AML procedural rules and internal auditing rules documentation. This documentation is usually prepared by us (Comistar). Once all of the documents are collected and ready, we’ll make the application and pay the state fees (345€ per license) on behalf of the client. Any questions asked by the FIU we’ll reply accordingly.
Timeframe for obtaining crypto licenses
The company registration time depends whether you already have an e-residency card or not. With the e-residency card, it takes day or two. With the power of attorneys, it will take usually around 1,5 – two weeks. If you go to Estonia, it will take few days, even though notary time has to be set no less than three days ahead of time.
Once the documents are submitted for the FIU, they take up to 30 working days to make a decision if they issue the license or otherwise not. Usually, your decision emerges quicker, as well as the total time needed is just not lots of weeks from start to finish.
Banking should be the most complex part with the whole process, since there aren’t a lot of banks that work with cryptocurrency companies. However, through spending hours and hours of looking through the banking options, we now have found few banks that people introduce to any or all of our crypto clients. The checking account application process is generally done through the clients, since the banks want to communicate for the entrepreneurs directly.
To execute operations with cryptocurrencies, incorporated Estonian company should have a minimal authorized capital that equals to 2,500 Euros. There are no strict authorized capital deposit requirements, however, to obtain the reputation of your reliable enterprise, it is strongly advised to deposit 2,500 euros on the company bank-account, our team of specialists is preparing to open for the consumer.
Shareholders with the company hold the directly to simultaneously behave as members of the board. A key requirement for the person in charge of AML may be the continuous monitoring of clients’ activities by having an objective in order to avoid money laundering as well as the financing of terrorism. In case of revealing suspicious activites it’s important to notify the state authorities of Estonia.
Cryptocurrecny exchange license obtaining procedure in Estonia is regulated and approved through the local law. Our team of skilled professionals will guide you by having a specific process and may explain all details, which can be vital to the successful result. Our experts accompany clients at all stages – through the process with the incorporation with the company till the final procedure of having the license.
Although many companies have chosen a Malta crypto exchange license, with all the country having established itself like a prime fintech hub for more than a decade, Estonia is another very popular choice mainly because it is one in the most advanced countries at Europe and the world from the technological perspective. Its digital transformation entered 2008 as blockchain technology evolved. Since this time, Estonia has advanced at full-speed, permitting foreigners to open companies remotely and access governmental services from a distance.
Estonia continues its progression of blockchain technology by permitting both local and foreign investors to create various forms of companies associated with cryptocurrency trading. It is the first country inside European Union to offer for activities related for the issuance and trade of digital tokens undertaken by companies. The following information provides assistance for companies needing to see how to obtain crypto licenses in Estonia.
Legislation on Cryptocurrency in Estonia
In 2014, the Tax and Customs Board of Estonia published a document called Taxation of Trade in Bitcoins concerning bitcoins in Estonia which acknowledged bitcoin as being a decentralised virtual currency. As a result, all persons and companies undertaking bitcoin transactions, have being registered as providers of business services.
In 2017, the government of Estonia also updated legislation associated with anti-money laundering, introducing improved regulations governing the operations of cryptocurrency companies. These include clearer definitions as to the utilization of cryptocurrencies, cryptocurrency wallets, kinds of licences available along with the obligation of obtaining authorisation in the Financial Intelligence Unit Estonia.
The new regulations imposed on cryptocurrency companies in Estonia do not impose any restrictions for these companies to function outside of the country but they do need to conform to the legislation in the country where they are going to offer their services.
Licencing Requirements for Cryptocurrency Companies in Estonia
Companies looking to sign up for an Estonia cryptocurrency licence must be aware that there are two forms of cryptocurrency licences that cryptocurrency companies can acquire.
A cryptocurrency exchange vendor licence allows a firm to deliver exchange services to the people enthusiastic about trading cryptocurrencies against fiat currencies and other cryptocurrencies. A cryptocurrency wallet company licence, meanwhile, is disseminated to companies who wish to offer e-wallets or virtual token wallets.
Other types of cryptocurrency businesses, such as those linked to mining activities, may also be established in Estonia but unless they may be involved in trading activities when a cryptocurrency broker licence is necessary, no special licence is important.
How to Get a Cryptocurrency Licence in Estonia
In order to execute a Cryptocurrency Company Formation, you will have to register your organization in Estonia first by choosing an organization name which is subsequently verified for availability. The company must then be registered with the Commercial Register and while using VAT authorities.
An application for either of the licences must then be filed with all the Financial Supervisory Authority from the Financial Intelligence Unit Estonia. Amongst the documents that have to be submitted are the organization’s Certificate of Incorporation, along with KYC and risk assessment documentation.
The applications are reviewed through the Intelligence Unit that can take as much as thirty days after which it time, the organization can commence its activities.
It normally takes about fourteen days to get a cryptocurrency licence to be issued plus it needs to be noted that a company should start its operations within a few months with the date how the licence was issued.
Reasons for Starting a Cryptocurrency Company in Estonia
It’s obvious why Estonia has earned a reputation being one from the most secure places inside the world to get cryptocurrency which owning an Estonia crypto licence is a prestigious accolade. The country’s commercial legislation encourages investors to set up companies by providing the straightforward registration procedure described, together with a transparent taxation system.
With its enthusiastic market and government that helps cryptocurrency initiatives, Estonia is a big attraction to companies starting business. As one of the European countries where cryptocurrency is strictly regulated, establishing a cryptocurrency company in Estonia is just not only a safe option for your business, it also provides your clients with the reassurance that your company falls under the auspices of a world-renowned jurisdiction.