Cryptocurrency License in Estonia

Company in Estonia OÜ will be happy to offer assistance in getting a cryptocurrency license in Estonia.

From March 10, 2020, you can apply for a single cryptocurrency license and provide services for the storage and exchange of cryptocurrencies.

Cost of cryptocurrency license

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.

“Company & Crypto-License in Estonia” package
9,900 EUR

“Company & Crypto-License in Estonia” package includes

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.

  1. Crypto-wallets and custodian services
    • The first category of services includes the generation and storage of encrypted customer keys.
  2. Crypto-exchange
    • The second category of services is the cryptocurrency exchange for fiat money or vice versa, or cryptocurrency for another cryptocurrency.

Benefits of obtaining a crypto-license in Estonia

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.

Single cryptocurrency license requirements in Estonia

Cryptocurrency wallet services

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.

Services of exchanging a virtual currency for a virtual or FIAT currency:

A single cryptocurrency license in Estonia allows to exchange cryptocurrency for FIAT and cryptocurrency for cryptocurrency.

Filing a cryptocurrency license application

The application for crypto license shall be filed by a Board member of the Estonian company.

The license application can be submitted electronically using an е-residency card, when you visit a notary in Tallinn or issue a power of attorney to a representative of the Company in Estonia OÜ, so that we can submit the application for you. The state fee for filing an application for the single cryptocurrency license is 3,300 EUR.

The fee shall be paid to the Estonian Ministry of Finance. The decision on issuing the license shall be made by the Anti-Money Laundering Data Office (an independent entity of the Police and Border Guard Department) within 60 business days after the date of application.

The license is open-ended.

Obtaining a single cryptocurrency license requires the following data:

  1. Contact details of the business owner (phone number, e-mail and mailing address), a CV.
  2. Address of the provision of services and web page address.
  3. Name and contact details of the person responsible for the offer.
  4. Name, personal code (if not available – date of birth), place of birth and residence address of the real beneficiary of the company.
  5. 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.
  6. 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.
  7. 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.
  8. 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.

New regulations for crypto-companies in Estonia

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.

Frequently asked questions

  • Does Estonia provide a license for crypto-activities?
    Yes, an Estonian company can apply for a cryptocurrency license under the Money Laundering and Terrorist Financing Prevention Act. The purpose of this law is to prevent the use of the financial system and economic space of the Republic of Estonia for money laundering and terrorist financing by increasing the reliability and transparency of the business environment.
    This law regulates the principles of assessment, management and hedging of risks associated with money laundering and terrorist financing, supervision of responsible persons, obligations arising from the collection and publication of data of beneficial owners, obligations related to the collection and publication of data on owners of payment accounts, liability of obligated persons in case of violation of the requirements arising from the legislation.
  • How to get a crypto-license in Estonia?
    In order to obtain a crypto-license in Estonia, you first need to establish a company in Estonia. Once the company has been established, you can apply for a Virtual Currency Service Provider License on the website of the Estonian Ministry of Economic Affairs and Communications. A Member of the company’s Board of Directors can apply for a cryptocurrency license in Estonia electronically.
    The state fee for an application for a license is 3,300 EUR. The fee must be paid to the Estonian Ministry of Finance. Rahapesu andmebüroo (RAB), an independent structure within the Police and Border Guard Board, examines the issue of a license within 60 working days after the submission of the application. The crypto-license is issued for a timeless period.
  • Are there still two separate licenses for crypto-activities in Estonia?
    No, under the new regulatory framework, the Financial Intelligence Unit (FIU) provides a license called Virtual Currency Service Provider, which has consolidated the previous license forms into one. You can apply for a single cryptocurrency license on the state website https://mtr.mkm.ee/.
  • What is the amount of the state fee for applying for a single cryptocurrency license in Estonia?
    The state fee payable to the Estonian Ministry of Finance (Rahandusministeerium) is 3,300 EUR. The state fee can be paid to one of five accounts of the Estonian Ministry of Finance:

    Rahandusministeerium
    Swedbank: EE932200221023778606
    SEB Pank: EE891010220034796011
    Danske Bank AS Eesti Filiaal a/a: EE403300333416110002
    Nordea Bank Finland PLC Eesti filial: EE701700017001577198
    Luminor: EE701700017001577198
  • How long does it take to obtain a license?
    The RAB notifies its decision to issue a license within 60 working days, but if necessary, this period can be extended up to 120 days (§ 71 Rahapesu ja terrorismi rahastamise tõkestamise seadus).
  • Can non-residents of Estonia own a crypto-company?
    Yes, non-residents of Estonia can be the full-fledged owners of an Estonian crypto-company, however, it should be borne in mind that a real/physical office, as well as the Board of a cryptocurrency company, must be located in Estonia.
  • Can non-residents of Estonia be on the Board of an Estonian crypto-company?
    According to the Law on the Prevention of Money Laundering and the Financing of Terrorism, at least one of the Board Members must be a resident of Estonia. The Board of a cryptocurrency company must be located in Estonia. It is also necessary to provide information about accounts in banks and payment systems that are opened in the name of the company.
  • Is a bank account required to obtain/maintain a license?
    Yes, a company applying for a crypto-license must have an account with a financial institution registered in Estonia (one of the Estonian banks or an international banking service provider registered in Estonia).
  • What is the minimum share capital for a virtual currency service provider?
    The minimum share capital is 12,000 EUR. The share capital must be paid in full prior to filing the application. You can deposit the share capital for a cryptocurrency company only with a cash contribution from the personal account of the owner/owners to the company’s account.
  • For how long is a crypto-license issued?
    The crypto license is issued for a timeless period.
  • Is it possible to deposit the share capital in cryptocurrency?
    No, you can deposit the share capital for a cryptocurrency company only by fiat contribution from the personal account of the owner/owners to the company’s account.
  • How is the share capital of a crypto-company carried out?
    Payment of the share capital is made using a fiat contribution (in cash or by bank transfer). The Members of the company’s Board of Directors pay a contribution equal to the par value of their share (i.e. corresponding to their share in the authorised capital). The payment is made from the bank account of a Board Member to the bank account of the company.
  • What will happen next to the funds on a corporate account of a crypto-company?
    The deposited amount can be used for any commercial activities of your crypto-company after a note appears in the Estonian Commercial Register that the share capital of the company has been paid.
  • When do you need to deposit the share capital to obtain a crypto-license in Estonia?
    Full payment of the minimum share capital of a crypto-company (12,000 EUR) is mandatory before applying for a single cryptocurrency license in Estonia. This amount can be further used to finance the commercial activities of the company.
  • What does a crypto-company need when applying for a cryptocurrency license in Estonia?
    The prerequisites for applying for a cryptocurrency license are:
    • The Board of Directors and place of business must be located in Estonia.
    • Paid share capital (at least 12,000 EUR).
    • The presence of a Director (an Estonian resident) of the company is mandatory.
    • Account with a financial institution registered in Estonia (one of the banks in Estonia or an international banking service provider registered in Estonia).
  • Why is it worth getting a crypto license in Estonia?
    Nothing attracts entrepreneurs more than the speed and cost of launching a project, and there is no doubt that at the moment there is little to no rivals to Estonia on the world stage. Only one cryptocurrency license is required in order to legalise any crypto-activity in Estonia, which strengthens country’s position among the most convenient and preferred jurisdictions for launching a blockchain project, and the financial costs of the legal part are several times lower than in other countries.
    We suggest that you familiarise yourself with the section in our blog entitled “Comparison of Favourable Jurisdictions for Establishing a Crypto Business”.
  • Do they carry out the audits of cryptocurrency companies in Estonia?
    Yes. The physical office can be visited by the regulator at any time to check the documentation and confirm the firm’s activities. The physical office of a crypto-company must be located in Estonia and correspond to the company’s activities.
  • Can a Director of a crypto-company be a non-resident of Estonia?
    No, the Director of the company must be a resident of Estonia and reside in Estonia.
  • How can Company in Estonia OÜ help in obtaining a crypto-license?
    Our company has extensive experience in obtaining cryptocurrency licenses in Estonia and is ready to accompany you throughout the entire licensing process.
    We will help in the establishment of a company that meets the requirements of the regulator, we will help with drawing up procedural rules and risk assessment, AML/KYC documents.
    Company in Estonia OÜ can also assist in the search and recruitment of an Estonian Director for your company and train them in client identification requirements in accordance with the Law on the Prevention of Money Laundering and Terrorist Financing. It should be noted that the chosen Director will be a member of your company only, which complies with the non-competition provision and will represent it in communication with the regulator.
    We can find an office that fully meets the requirements of your company. In addition, we will help with opening a bank account for depositing share capital and opening a current account for working with crypto-exchanges.
    The specialists of Company in Estonia OÜ will be happy to keep you informed of all the latest changes in Estonian legislation and are always ready to answer all your questions.
  • Isn't it easier to buy a ready-made company with a crypto-license?
    It should be borne in mind that a crypto-license is issued for a specific project, with a specific Owner, Director, and KYC/AML Officer, whose identity is carefully verified during the licensing process. Also subject to review are procedural rules, risk assessment documentation, and AML documents.
    If a company with a crypto-license changes the Owner, Director, or KYC/AML Officer, then the representatives of the regulator will study the information again, and there is a great risk that the license will be revoked, since it was issued for a completely different project.
    The term for reviewing new participants in the company and the project itself is 2 months and is absolutely identical to the time for obtaining a crypto-license for a new project. It should also be noted that the license is suspended at the time of the review.
  • What difficulties can arise in the process of obtaining a crypto-license in Estonia?
    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 fulfill their duties. Many companies have lost their licenses due to the lack of contributed share capital or problems with a physical office that did not meet the requirements of the regulator.
  • How to avoid fraudulent schemes?
    Sometimes legal companies offer their clients ready-made solutions – companies with already obtained crypto-licenses. But at the same time, they are silent about the problems that may arise in the process of changing Owners. Obtaining a crypto-license by an Estonian citizen lawyer is a much simpler process than obtaining licenses for companies owned by non-residents. After re-registration of such a company with new Owners, the licensing process, in fact, begins from the very beginning.
    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 they are employed.
    Law firms often offer the services of a private KYC/AML Officer or Nominee Director to many companies at the same time, thereby 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.
    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.
  • Where to open a bank account for a crypto company?
    Opening a bank account for a company with a high-risk activity, which is cryptocurrency, is a complex issue requiring special attention. It is worth considering the fact that none of the Estonian banks works with companies of similar activity, and it is impossible to buy a company with an open bank account.
    Our company has partner banks throughout Europe that are ready to work with cryptocurrencies, and we will be happy to accompany our clients in opening a current account.

Requirements for the requesting company

  • The company applying for a license must have paid a share capital (12,000 EUR).
  • The company applying for a license must have an office in Estonia.
  • The company applying for a license must have a representative in Estonia (one of the Board members).

More information regarding rules, money laundering and terrorist financing prevention can be found here.

Contribution of share capital

According to §136 of the Estonian Commercial Code, “the share capital of a company must be denominated in euros”. Accordingly, the authorised capital of a crypto-company cannot be denominated in cryptocurrency.

The share capital is paid in cash or by bank transfer. The members of the Board of the company make a contribution in the amount corresponding to their share in the share capital. The payment is made from the bank account of the member of the Board to the bank account of the company.

The deposited amount on the corporate account can now be used for any commercial activity of your business. Thus, the share capital can be used to invest, pay the company’s suppliers, or even offer loans. However, it should be noted that dividends can be paid exclusively from the profits of your company.

AML specialist interview with FIU (Financial Intelligence Unit)

In accordance with the new policy regarding the licensing process for crypto-activities, the FIU may invite a KYC/AML specialist for a personal meeting prior to issuing a license. The purpose of this interview is to confirm that the contact person is familiar with the AML procedure rules and the relevant Estonian laws in case of suspicion of money laundering or terrorist financing. If the KYC/AML officer is not part of the company structure, it is necessary to provide documents confirming the employment relations between the company and this person. Failure to comply with this requirement will be grounds for refusal of issuing the license.

There is a 60-day period to turn up for an interview with the FIU. The final decision on the licensing of the company is published after a two-hour meeting. Please note that the interview is conducted in Estonian and an experienced translator may be required to accompany it. If the client does not comply with this clause within the specified timeframe, the crypto-company license application will be automatically annulled.

In addition, the FIU also revokes a license if:

  • The undertaking repeatedly fails to comply with the FIU regulations.
  • The undertaking has not been commercially active in the field within 6 months from the date of the license.

 

Company in Estonia 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 both personalised order processing and professional consulting, reasonable rates, and company registration services for clients from all over the world. In addition, Company in Estonia OÜ provides continuous support to entrepreneurs in accordance with the latest updates in Estonian legislation.

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