Category: Crypto

Cryptocurrency License Validity Check in Estonia

[vc_row][vc_column][vc_column_text]If the activities of your financial company are related to cryptocurrency and you have access to the cryptocurrency assets of clients, then such an Estonian company must have an appropriate license. The consequences of doing business without a proper license can be serious, resulting in a company being fined by the regulator and its reputation in the digital age could be hopelessly damaged.

It should also be noted that crypto-companies are a high-risk area of ​​activity, therefore proper control of crypto-companies for compliance with relevant legislation requires special attention from the Regulator (Rahapesu andmebüroo). The lawyers of LKS Consult OÜ monitor our clients’ compliance with the requirements of the Regulator, preventing fines or license revocation at an early stage.

Reasons for License Revocation by the Regulator

The most common problem today is the revocation of licenses from crypto-companies that have changed their owners in the course of their existence. Also a common problem is the Director’s inadequacy and the inability of the KYC/AML Officer to fulfil their duties. Many Estonian companies have lost their licenses due to a lack of contributed share capital or problems with an office that did not meet the requirements of the Regulator.

The next frequently encountered problem is a nominal KYC/AML Officer who has no idea about the law on the basis of which the license was obtained and about the real activities of the company in which one is employed.

Fraudulent Schemes of Service Providers

Law firms often offer KYC/AML Officer/Nominee Director services to many companies at once, thus jeopardising the licenses and reputation of all their clients. Based on the information we have, over 500 crypto-companies have lost their licenses due to such fraudulent schemes.

It often happens that unscrupulous law firms offer their clients companies with already obtained crypto-licenses, and in search of ready-made and quickly implemented solutions, entrepreneurs agree to such transactions. In such cases, the risks of losing a license, which may arise in the process of a change of ownership, are deliberately concealed by unscrupulous service providers. Judge for yourself: obtaining a crypto-license by an Estonian citizen lawyer is a much easier and faster process than obtaining a license by a company owned by non-residents of Estonia. After the re-registration of such a company for new owners, the licensing process, in fact, begins from the very beginning, since the previous license is suspended by the Regulator for the period of the change of management and analysis of information about the new owners and the project.

Before starting the licensing process, you should understand that quick and cheap solutions are excluded, and by agreeing to them, you take full responsibility for the loss of time and money.

How to check if a company has a license or registration to do business in Estonia?

Before you start working with a service provider, you should check if the law firm is licensed. Fortunately, the general public has the right to do this on its own online at https://mtr.mkm.ee/tegevusluba?m=97.

Crypto-companies and industry partners use this resource to ensure that they/partner companies being considered for cooperation are licensed in Estonia. The information on the website is publicly available. In addition, on the homepage of the Ministry of Economic Affairs and Communications you can check: the address of the location of the cryptocurrency company; an account with a financial institution registered in Estonia; KYC/AML Officer’s data (name, surname, email, phone), and the date of issue of the cryptocurrency license. If you have any questions or suspicions, we recommend that you contact the Regulator directly to resolve them (Rahapesu andmebüroo, rahapesu@politsei.ee).

Rahapesu andmebüroo

Rahapesu andmebüroo is an Anti-Money Laundering Information Bureau that licenses businesses in Estonia. RAB is an independent structural unit of the Police and Border Guard Board, whose main task is to suppress the financing of money laundering and terrorism in Estonia.

The Bureau analyses and verifies information received from liable organisations and other persons regarding suspicions of money laundering or terrorism, if necessary, takes measures to preserve property, and if signs of a crime are detected, immediately transfers the material to the competent institutions. The main tasks of the RAB are described in more detail in the Money Laundering and Terrorist Financing Prevention Act.

It is expected that all persons who suspect that the transaction may be related to the financing of money laundering or terrorism in the course of an economic transaction will report suspicious transactions to RAB. Since January 2008, it has become possible to report violations over the Internet by filling out an electronic reporting form on the Rahapesu andmebüroo homepage.

In addition to the main tasks, the Information Bureau on money laundering performs various additional tasks to improve the efficiency of the system for suppressing the financing of money laundering and terrorism in Estonia: for example, various studies were carried out both among market participants and among law enforcement bodies.

Today, one of the most important tasks of RAB is the licensing of participants in the Estonian financial market, in particular, persons providing services to financial institutions, persons offering e-currency exchange services, and persons offering virtual wallet services.

Taking into account the needs of customers from all over the world, LKS Consult OÜ has developed an all-in-one offerCompany & Crypto-License in Estonia”, which includes registration of an Estonian company plus all the necessary services for obtaining a single crypto-license. For visitors from Spain please visit Licencia de Criptomoneda en Estonia.

LKS Consult OÜ  offers a wide range of additional services, such as assistance in selection and rental of an office; assistance in making company share capital contribution; assistance in recruiting a local Company Director, signing a working contracttraining of a Company Director for KYC/AML requirements; as well as KYC/AML Officer services.

An individual customer approach is vital for us. We take care of your business needs, combining personalised order processing and professional consulting, reasonable rates, and company registration services for clients from all over the world. In addition, LKS Consult OÜ  provides continuous support to entrepreneurs in accordance with the latest updates in Estonian legislation.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][us_page_block id=”10337″][/vc_column][/vc_row]

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Bitcoin License in Estonia

[vc_row][vc_column][vc_column_text el_class=”padding”]Cryptocurrency in Estonia is legalised at the state level. Since bitcoin (BTC) is a digital currency, a special cryptocurrency license is required for all transactions connected with cryptocurrency on behalf of an Estonian company. We provide services to projects working in the field of blockchain technologies and cryptocurrencies and offer assistance in obtaining the appropriate license. LKS Consult OÜ provides legal support to crypto-companies, assistance through professional consulting and up-to-date analysis of the cryptocurrency market.

If you need a license to exchange cryptocurrency, then the specialists of LKS Consult OÜ will develop the best solution for you. We are ready to advise on a specific issue or comprehensively approach the development of a large project according to the client’s vision and provide legal support for a crypto-project of any complexity.

Story behind Bitcoin

A technical description and the first version of the software appeared towards the end of 2008, in which the BTC cryptocurrency protocol was implemented. The emergence of bitcoin and cryptocurrencies in general was preceded by a number of large-scale studies and developments in the field of encrypted transactions by such researchers as David Chaum, Adam Back, Nick Szabo and others.

Chaum proposed using a “blind signature” algorithm to allow a secret transaction between two anonymous participants and developed “electronic cash” protocols by which a conditional seller approves a transaction only after an anonymous payment is authenticated. This technology has become the basis for transactions of bitcoins.

The prototype of the mechanism for creating a cryptocurrency was invented by Adam Back in 1997, proposing to use the anti-spam system – Hashcash, in which the sender performs many time-consuming operations, while the recipient is able to verify their authenticity as quickly as possible.

In 1998, Nick Szabo, in turn, began work on the Bit Gold decentralised money system. According to his vision, electronic money would save users from many threats, including theft, counterfeit, and even inflation.

The blockchain system served as the basis for transactions in digital currency. The creators of bitcoin have developed a database that stores information about transactions in the form of blocks linked by a mathematical algorithm. Thanks to such a system, when a content of one block changes, it is necessary to make edits to the entire subsequent chain of blocks, thus preventing any unnoticed changes in the blockchain.

But the main role in the operation of the entire system is played by miners – they are the ones who create new blocks from transaction records. The mining process requires solving a number of complex mathematical tasks, so miners need to use powerful computing resources on specially equipped computers. For each block created, they receive a reward in the form of a commission from transactions or newly created bitcoins, and the mining difficulty is automatically adjusted every two weeks depending on the total number of blocks that appeared over a two-week period.

The approximate exchange rate of BTC in 2009 was between 700 and 1,600 units per dollar and was calculated based on the processor power consumed to create one unit, multiplied by the cost of electricity in the United States and divided by the total number of bitcoins created by the miner.

At the beginning of 2010, the first service for buying bitcoins – the Bitcoin Market, appeared on the network, and in July the popular IT-portal Slashdot made a publication about bitcoins, as a result of which the number of users of virtual money increased dramatically. After just a month, 10,000 BTC cost 600 dollars, and netizens began to actively mine their own cryptocurrency. As a result, the first BTC exchange – the MtGox, was created, which allowed purchase and exchange of cryptocurrency for fiat money. The bitcoin rate has risen in just a couple of months: from 6 cents per unit in July to 50 cents in November. The total market volume was estimated at 1 million dollars. In February 2011, bitcoin caught up in value with the dollar, and by March the crypto-exchanges had been established for exchanging bitcoins for British pounds and Brazilian reais, increasing the total market volume to 10 million dollars.

After the first bitcoin conference held as part of the World Expo in New York, then the second in Prague, as well as the publications about cryptocurrency in Forbes, The Economist and New York, BTC was acknowledged as a real alternative to traditional fiat currencies. A similar project of virtual money – Google Bucks, had not been subsequently implemented, because a few months after its nationwide triumph, bitcoins became associated with a shady economy and crime.

Experts agree that the disclosure of the identity of the BTC inventor (or a group of people) under the pseudonym Satoshi Nakamoto could have a huge impact on the economy and internal politics of bitcoin to this day. It is only known that since mid-2010, Satoshi Nakamoto has not been involved in the project.

Mining

Mining translates as earning bitcoins from the power of the hardware. On the one hand, it was cryptocurrencies that gave birth to mining. On the other hand, the issue of new bitcoins is impossible without mining, since new bitcoins are rewarded to a miner who first solves a hashing problem and generates the next block. That is, during mining, new blocks are generated in the blockchain, for each of which a reward in the form of electronic money (BTC) is granted. Bitcoin miners receive bitcoin as a reward for generating blocks of verified transactions, which are accordingly added to the blockchain. Thus, mining has enabled earning of tokens without fiat investments.

Miners are paid as auditors. They do the job of verifying the legality of bitcoin transactions to ensure that users have not attempted to illegally spend the same bitcoin twice, thereby helping to prevent the “double-spending problem”. After verifying a 1MB (megabyte) of a bitcoin transaction, the miner is rewarded with a certain number of bitcoins.

Halving

Once in 4 years, every 210 thousand blocks, the amount of the reward is revised and reduced by exactly half. The process of division of the amount of miner’s reward for adding a new block to the blockchain chain is called halving. The main task of halving is to control the emission of cryptocurrency and curb its inflation. Initially, from 2009 to 2012, miners received 50 BTC, therefore:

  • November 2012 to 2016 – 5 BTC
  • July 2016 to 2020 – 5 BTC
  • June 2020 to 2024 – 25 BTC

The next halving is expected in 2024.

When will the last bitcoin be mined?

According to experts, the last 21-millionth bitcoin will be mined in 2140, after which the emission of bitcoins will cease forever (as planned by the legendary creator of BTC – Satoshi Nakamoto). Limited emission of cryptocurrencies is a key factor in the growth of its value in the long term. This has been repeatedly stated by many analysts and investors. In general, investors and users should not worry about the limited number of tokens as many believe that bitcoin will still exist after mining ends.

Bitcoin Price Online-Chart


The sharply increased interest of institutional investors in cryptocurrency in 2020 ensured of the large capital inflow in the crypto-sphere, which subsequently has created conditions for a more confident growth in the cost of BTC.

There are currently over 400 crypto-companies doing business from Estonia for a number of reasons. The team of experts of LKS Consult OÜ is pleased to accompany your cryptocurrency project in the necessary procedures for preparing documents for submitting an application and obtaining a permit for crypto-activities in Estonia.

LKS Consult OÜ  offers a wide range of additional services for cryptocurrency companies, such as assistance in selection and rental of an office; assistance in making company share capital contribution; assistance in recruiting a local Company Director, signing a working contracttraining of a Company Director for KYC/AML requirements; as well as KYC/AML Officer services and various accounting services.

An individual customer approach is vital for us, and we take care of your business needs. LKS Consult OÜ  provides continuous support to entrepreneurs in accordance with the latest amendments in Estonian legislation.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]The specialists of LKS Consult OÜ will be happy to assist you in obtaining a cryptocurrency license in Estonia.[/vc_column_text][/vc_column][/vc_row]

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Estonian Cryptocurrency

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Is Estonia planning to issue its own cryptocurrency?

estonian cryptocurrencyCreation of a convenient ecosystem for business based on blockchain and cryptocurrency in Estonia has attracted many investors and developers from all over the world to our country. The country supports an emerging tech sector and has invested heavily in a ubiquitous digitalisation. Thus, Estonia has digitised all its public services and processes, providing each citizen with a secured digital identity, encrypting all publicly available data in a decentralised storage.

Not so many countries have seriously thought about their own digital money, but it is quite appropriate for Estonia to become a pioneer. “Estonia sets the tone for cryptocurrency development around the globe,” said Blockhive co-founder Hikaru Kusaka. The development of cryptocurrency from speculation to business relevance leads to a logical outcome – a cryptocurrency controlled and regulated by the state.

The idea of Estcoin went public on August 22, 2017, when Kaspar Korjus, the former Head of the e-Residency programme, first came up with the idea for the Estonian national virtual currency. According to his vision at that time, any participant of the e-Residency programme could use the token.

It was assumed that Estcoin could become a circulating exchange unit between electronic residents exclusively within the framework of the programme. For example, e-Residents could receive a programme promotion bonus by encouraging new members to start their own business in Estonia.

One of the suggestions was that Estcoin could be exchanged for the access to digital services, such as signing a digital contract or filing a tax return. Finally, the last proposal involved pegging Estcoin to euro, which would basically mimic the existing economy, adding useful utilities to accompany the blockchain.

The publication with the idea in Kaspar Korjus’s blog caused a lot of discussions at that time, but today it is clear that the initiative was put on hold. “We don’t have specific plans for Estcoin, and we won’t have any in the near future,” says Katrin Vaga, Head of PR of the e-Residency programme.

Eesti Pank was critical of the idea of ​​Estcoin from the very beginning: “Under the state initiative, it would be very dangerous to offer non-residents alternative financial services that would help them evade internationally agreed requirements for combating money laundering,” commented the current President of Eesti Pank, Madis Müller.

Although Estcoin stays only a concept, this kind of initiative demonstrates Estonia’s commitment to the idea of ​​a transparent, fair, and digital society. Whether the idea of ​​a national cryptocurrency is successful or not, Estonia provides an inspiring example of how countries could implement blockchain in all spheres of life.

Cryptocurrency in Estonia is legalised at the state level

The IT jurisdiction of Estonia is considered one of the most crypto-lenient of its kind (read our comparative analysis here) with facilitated conditions for obtaining a license for the exchange of cryptocurrency in the blockchain technology industry. In other words, the so-called single cryptocurrency license is an official permission to conduct a regulated cryptocurrency business in Estonia.

Many new cryptocurrency and trading platforms are created every day, and a significant part of them have received their license in Estonia, since the local order presupposes an easier process of obtaining a crypto-license, compared to the similar process in other countries.

General Provisions for a Company Applying for a Single Cryptocurrency License

  • The minimum authorised capital of a crypto-company is 12,000 EUR, and its cash deposit before applying for a crypto-license is mandatory. This amount can be later used to finance the commercial activities of the company.
  • The state fee payable to the Estonian Ministry of Finance is 3,300 EUR.
  • Before applying for a cryptocurrency license in Estonia, the applicant company needs a corporate IBAN account. Estonian banks do not accept applications for opening a bank account from crypto-companies, however, they have the right to open their account with the European Electronic Money Institution.
  • The Board and the place of business of a cryptocurrency company must be located in Estonia.
  • The company applying for the license must have a physical office in Estonia.
  • The presence of a Board Member of an Estonian citizenship is mandatory for a cryptocurrency company.
  • After applying for a crypto-license in Estonia, the KYC/AML Officer will have to undergo an interview with the regulator (RAB) to confirm their skills and suitability for the position.

There is no income tax for cryptocurrency companies in Estonia. Instead, only distributed profits are subject to 20% corporate income tax at 20/80 of the net profit distribution. In other words, according to the Estonian taxation scheme, a company benefits from an opportunity to reinvest its profits tax-free.

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 data of the Estonian Info Register, it became clear that Estonian e-Residents from all over the world currently generate over 1 billion euros of economic activity through their Estonian companies.

Currently, more than 400 crypto-companies conduct their business from Estonia for a number of the above reasons, which undoubtedly distinguish Estonia from other countries when choosing a jurisdiction to launch a crypto-business. The team of experts of LKS Consult OÜ is happy to accompany your cryptocurrency project in the necessary procedures in the preparation of documents for submitting an application and obtaining a permit for crypto-activities in Estonia.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][us_btn label=”More information” link=”url:https%3A%2F%2Fwww.estonia-company.ee%2Fcrypto-license-in-estonia-package%2F|||” align=”center” css=”%7B%22default%22%3A%7B%22margin-top%22%3A%2220px%22%7D%7D”][/vc_column][/vc_row][vc_row][vc_column css=”%7B%22default%22%3A%7B%22margin-top%22%3A%2220px%22%7D%7D”][vc_column_text]The specialists of LKS Consult OÜ will be happy to assist you in obtaining a cryptocurrency license in Estonia.[/vc_column_text][/vc_column][/vc_row]

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Changes to RAB Requirements and New Regulations for Crypto-Companies in Estonia

[vc_row][vc_column][vc_column_text el_class=”justify”]Requirements and New Regulations for Crypto-Companies in EstoniaNew regulations for companies working in the field of cryptocurrencies came into force on March 10, 2020. You can find out more about the new requirements and regulations below:

  • Real/physical office of the company in Estonia. The company’s management Board and location must be in Estonia.
  • Increase in the state fee for a virtual currency license from 345 to 3,300 EUR.
  • Provide information about accounts in banks and payment systems that are opened in the name of the company.
  • The paid-up share capital of the company on the basis of (1) 4) article 70 of this Law virtuaalvääringu teenuse pakkumine is not less than 12,000 EUR.
  • The application for a crypto-license will be reviewed by the financial intelligence unit within 60 days. Based on decision of the financial intelligence unit, the period may be extended to 120 days.

Already licensed companies must comply with the law by July 1, 2020 and provide additional information to the RAB. Information about new regulations is available here.

LKS Consult OÜ offers full tax support for cryptocurrency companies. Our team will be pleased to advise on tax-related issues and provide accounting services in Estonia.[/vc_column_text][/vc_column][/vc_row]

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