Cryptographic Currency License in Estonian Jurisdiction: Description of the Procedure and New Regulations

Consider the option of obtaining a cryptocurrency license in Estonia for an enterprise that is registered in this state. Recently, there has been a change in the rules, and some requirements have increased, but Estonia is still one of the most attractive jurisdictions where such licensing can be carried out.

Cryptocurrency license in Estonia

Why is it necessary to apply for a crypto license in Estonia? Estonia offers favorable conditions for a unified licensing for the exchange of cryptographic currencies and the use of electronic wallets.

As a member of the European Union, Estonia grants an EU cryptocurrency license that allows it to operate in other European countries without the need to obtain additional licenses there. This is the main advantage of obtaining a cryptographic currency license in Estonia.

The new AML (prevention of illegal circulation of funds) requirements came into effect in Estonia on March 10, 2020. All operating enterprises must make changes to their own work in order to comply with the new rules. Additionally, starting from the same date, instead of the 2 licenses used before (e-wallet and virtual currency exchange licenses), a single license is applied – Virtual Currency Provider.

With this licensing, the company can provide the following list of services:

• electronic wallets;
• cryptocurrency exchanges;
• cryptocurrency payment system;
• alternative payment system;
• wholesale purchase of precious stones, metals and jewelry.

The main requirements for an Estonian company when applying for a license are:

• the minimum amount of funds required for the authorized capital is 12 thousand euros;
• availability of a physical office and a registered legal address in the country;
• Estonian manager (or several);
• no previous convictions for the founders of the company;
• availability of a resume for each founder of the company;
• an account with a bank or neobank or fintech company located in the EEA.

It is necessary to properly register the company in order to realize the opportunity to obtain licensing quickly and without problems.

Selection of enterprise managers

Initially, you need to hire local managers for your business. Since the general director of the company must be a resident of Estonia by law, there are two options:

• you can hire a citizen (we will help in this matter);
• obtain a residence permit in Estonia (as a director of a company, you will be eligible for a work visa in the state, and we will also help with this).

The CEO of a company does not have to live permanently in Estonia, but it is important to have a legal status in the state and be a member of the Financial Intelligence Unit (FIU).

Additionally, the firm must have an AML worker who will be responsible for the AML procedures that the company will have to organize and the interaction with the FIU employees. The person holding this position must have a higher education in finance, economics or law, as well as be a professional, match in personal qualities and have an excellent reputation.

An employee’s AML registration must be approved by the FIU. In theory, the director of the enterprise can also become this employee, but this is not the best solution due to the possible conflict of interest. An AML employee does not have to live in Estonia. Hiring employees for your company can take a long time due to the lack of decent candidates. We will offer several professionals who can perform AML duties in your future company in Estonia.

Personal documents of the founders of the company

Most importantly, it is necessary to provide copies of the passports of all founders of the company certified by a notary. In addition, Estonian laws require that the owner of the business on whose behalf the application for a crypto license in the country is submitted has no criminal record. A criminal record must be requested from the police in your state. Since in some countries (for example, in America) this cannot be done, in Estonia you can take a solemn oath in front of a notary and swear that you have no criminal record.

Apostilled documents must be submitted in electronic form, scanned, because they will have to be sent by e-mail.

Diplomas and resumes

All top managers of the company must present personal resumes and, ideally, university diplomas. It will be very good if the diploma is provided in English. If you do not have a university degree, you must provide a high school diploma. In this case, the resume should better reflect the experience in the cryptocurrency field.

How to register a company in Estonia

You can register a company in Estonia in two different ways.

1. You can obtain electronic residency in the state, which will provide you with the right to open a business there.
2. You can register to establish a company with a notary.

At the same time, it is not necessary to come to Estonia. Through the electronic residence, it is easy to register a company there remotely, and in the second case, you can create a power of attorney and send it to Estonia by courier delivery. Partners will be able to register a company there on your behalf.

Registration of a company in Estonia using an electronic resident card

You can send an online application for an electronic resident card on the official website. Often, the processing of an application takes from a month to six weeks, but due to the current situation, it may take a little longer.

If you would like to receive a complete guide to obtaining an Estonian residence permit card, please contact the specialists of our company.

An electronic resident card is valid for 5 months. If you wish to collect it, you will need to come to Estonia to take your fingerprints. With an electronic resident card, you can register an LLC through the electronic register of companies. The registration fee in Estonia is 190 euros, and the time required for the procedure is 1-5 working days.

Registration of a company in Estonia through a notary

The power of attorney gives the right to register a company in Estonia with the help of a notary. The process lasts from 2 to 3 weeks, but it all depends on how quickly you collect the required documents and send them to Estonia.

In addition to issuing a power of attorney, you will need to make copies of all pages of your passport, sign them, legalize them and then send them to Estonia by courier delivery. To register a company in the state, one person is enough, because the owner can immediately become the director of the company. It is not necessary to hire a secretary. Please note that information on the beneficiaries of the Estonian company is subject to publication.

When an enterprise’s income is distributed as dividends, it is taxed at a rate of 20% in the state. If the income is reinvested in the firm, there is no tax.

The specialists of our company will kindly provide legal support in establishing a company in Estonia to obtain a crypto license there. The procedure can be performed remotely. Apply for a free consultation to clarify the details.

Opening a bank account in the EU

After the company is registered in Estonia, you will need to open a corporate bank account. Nevertheless, it doesn’t have to be a traditional bank account. You can contact a European fintech company that will open an account with IBAN for you. Not all institutions of this type can do this, but an IBAN is needed to obtain a crypto license in Estonia.

Banking arrangements are the most difficult part of the process of opening a cryptocurrency firm in Estonia. You will need to create a corporate account for your business. Then you will need to organize the deposits of future customers. Our experts will help with opening a bank account in the EU and obtaining a cryptocurrency license in Estonia.

Office rental in Estonia

To obtain a cryptocurrency license, a company in Estonia must have an office in the country. Please note that this requires not only a legal address, but also a real office. An online office or a rented office for several hours will not work.

This is due to the fact that a firm must actually exist in Estonia in order to obtain a crypto license. The company must also have employees who are nationals of the country and local offices. Renting an office in Estonia is quite cheap, but it will cost about 500 euros per month. We will help you find the right office for your business.

How the recent changes have had an impact on existing crypto businesses in Estonia

One of the innovations is an increase in the authorized capital of such enterprises. Since it was set at 12 thousand euros, the operating firms were forced to additionally invest in their banks with an indication of the contribution to the authorized capital for the purpose of the payment. However, they didn’t have to create additional ownership interests.

In addition, crypto companies in Estonia have to adjust their AML to the new requirements (they still have time for this). The rules have become more complex, which means that some effort and possibly additional costs are required on the part of Estonian cryptocurrency firms.

Issuance of a license for cryptocurrency in Estonia

The period for consideration of the application is 2 months in accordance with the laws. However, the FIU can increase the processing time of the application up to 4 months, if necessary. While your application is being processed, you may be required to submit additional documents.

The process of obtaining a crypto license in Estonia is quite long and complicated. Nevertheless, this is the case with any license. It used to be easier to get a crypto license in Estonia than in any other country. The ease of registration attracted many cryptocurrency firms to Estonia. This helped improve the local economy, but since it was very easy to obtain a cryptocur rency license in Estonia, it was not appreciated enough.

Now the requirements have become tougher, but this is rather a virtue. Customers using licensed products can rest assured that the state qualitatively controls the owner of the license. This makes it possible to trust more licensed products.

Summary

If you wish to setup a crypto exchange in Estonia – please contact us and our team of experienced lawyers will assist you.

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