Crypto-License in Estonia. Virtual Currency License.
6 min read

Crypto-License in Estonia. Virtual Currency License.

On March 10 2020, a single cryptocurrency license called Virtual Currency Service Provider License appeared. Crypto companies must comply with the same reporting rules and requirements as all other financial institutions in Estonia.
Crypto-License in Estonia. Virtual Currency License.

First of all, let's try to understand what the virtual currency is. According to professional definitions, virtual currency is a value represented in digital form that can be digitized, stored, sold, and accepted as payment by individuals or businesses.

The global economy has been taken over by cryptocurrency, which is growing in popularity. Despite debates about the fragility of the cryptocurrency market, people are still benefiting from investing in cryptocurrencies.

Cryptocurrency outperforms traditional means of payment due to its multiple advantages - availability, reliability, and independence. Besides being an opportunity for businesses to invest, cryptocurrency offers a modern way to make money.

Crypto License in Estonia. Single Cryptocurrency Exchange License.
Estonia is considered the most lenient of its kind with eased conditions for obtaining a cryptocurrency exchange license for startups in the blockchain technology industry. In other words, a so-called crypto license in Estonia is an official permission to operate a regulated cryptocurrency business.

Benefits of Estonia-Based Cryptocurrency Business

The Estonian cryptocurrency market attracts investors from all over the world for several reasons. Being a law, Estonia-based cryptocurrency business has certain advantages.

  • The complete legality of the work.
  • Credibility and stability due to government regulation.
  • Transparent tax policy.
  • A market full of enthusiasm.
  • All application forms and useful data are available online.

Corporate Tax in Estonia

Furthermore, there is no corporate income tax in Estonia. Instead, only distributed profits are generally subject to corporate income tax at a rate of 20/80 of the net distributed profit.

In other words: Under the Estonian tax system, a company has the option to reinvest its profits tax-free.

Crypto-License & Crypto-Exchange Company in Estonia
Register a Cryptocurrency Exchange in Estonia. Obtain a Crypto-License and start a cryptocurrency business. Cryptocurrency today is a growing business. More and more people are investing in virtual currency. The Estonian Government reacts by implementing new regulations.

Background Information

On 27 November 2017, a new Money Laundering and Terrorist Financing Prevention Act came into force in the Republic of Estonia on the basis of Directive №2015/849 of the European Parliament and the Council, which allows companies to legally offer services for the exchange, transfer and storage of crypto and virtual currencies to customers on the basis of the following licenses:

  1. License of the provider of services for the exchange of virtual currencies into fiat currencies.
  2. License of the provider of services for virtual wallets.

The first type of license enables the exchange of fiat currency into cryptocurrency and vice versa. The second license enables the provision of e-wallet services for virtual currencies.

After that, on March 10 2020, both licenses have been merged into a single cryptocurrency license called Virtual Currency Service Provider License.

Crypto companies must comply with the same reporting rules and requirements as all other financial institutions in Estonia.
AML & CFT Services | AlphaLAW Estonia AML Officer Compliance
The prevention of money laundering and terrorism financing is now a major obligation for all businesses and non-profits. AlphaLAW can help you reduce your organisation’s AML and CFT risks. Here is the list of our services.

Requirements

A Board Member of Estonian company may apply for a cryptocurrency license in Estonia. The application for a license can be submitted electronically with an e-resident card, Estonian residence card or via notary.

The state fee for a single cryptocurrency license corresponds to €3,300. The authorities will make a decision on a license within 60 business days after the application is submitted. The simplicity of the process does not mean that the regulations are not taken seriously.

In connection with the Money Laundering and Terrorist Financing Prevention Act, some changes were recently made to set stricter limits for companies applying for an Estonian crypto license:

  • The minimum share capital of a crypto company is €12,000 and must be fully paid up before applying for a crypto license in Estonia. This amount can be immediately used to finance the commercial activities of the company.
  • The state fee payable to the Estonian government is €3,300.
  • A company account IBAN is required before applying. Estonian banks do not accept applications for opening a bank account for crypto companies. However, companies have the right to open an account at European Electronic Money Institution.
  • The Board of the company and place of business must be located in Estonia.
  • The company applying for the license must have a legal seat in Estonia.
  • The presence of an Estonian resident (Company Board Member) is mandatory.
  • After applying for a crypto license in Estonia, the KYC/AML officer must conduct an interview with The Estonian Financial Intelligence Unit (RAB) to confirm their skills and suitability for the position.
Payment Account in Europe, Bank Account for Crypto. AlphaLAW
For many companies and individuals, international banking is time-consuming, frustrating, expensive. AlphaLAW provides you with services that allow to open European Bank (Payment) Account, Bank Account for Crypto, and to reduce the cost of its maintenance.

Bank Account

One of the biggest challenges for crypto and fintech entrepreneurs is opening a bank account. Opening an account in an Estonian bank is not possible as none of the Estonian banks deal with high-risk businesses (crypto, gambling, CBD, adult, etc.).

Crypto businesses are under strict supervision as their owners are often prone to fraud and breaking the law, for example by sponsoring terrorism.

While traditional banking institutions are slow to adapt to the realities of today's world caused by virtual currencies, more and more cryptocurrency businesses are emerging and successfully evolving. Since every crypto company needs a bank account to operate, serve customers and receive payments, opening a bank account is an important point to pay special attention to.

It is also important to keep in mind that opening and maintaining an account for a business operating in a high-risk industry is more expensive and complicated than in other business sectors. The biggest challenge is gathering all the necessary documents and complying with all the regulations.

Risk assessment is also important to help avoid unexpected problems and is paramount in crypto businesses, which continue to have a higher level of risk. Therefore, it is worth considering consulting professionals who can provide you with a risk assessment and a detailed market overview.

Development of AML documentation according FIU regulatory requirements
Development of AML documentation according to FIU regulatory requirements is a process that should be carried out by professionals with a positive background of interaction with the financial inspection and other government agencies.

AlphaLAW team will find the most favorable and profitable solution for your crypto and fintech business, saving you time and money. We have our own payment system which is seems to be the best solution (reliable and afforadble) for opening an account for businesses operating at high risk.

Specialists from AlphaLAW will be happy to assist you in obtaining a cryptocurrency license. Based on the needs of clients from all over the world, we have developed an all-inclusive offer in form of special package which includes the registration of an Estonian company and all the necessary services to obtain a crypto license in Estonia.

Our services include (but not limited to):

  • Preparing, Collecting and Drafting of the necessary documents.
  • Drafting the procedural and KYC rules of a company.
  • Translation of documents into Estonian/English and assistance throughout the process of obtaining the license.

In case you have any questions or are interested in obtaining an Estonian license to exchange cryptocurrencies and other virtual assets for a fiat currency (crypto license in Estonia), please contact us through the following communication channels.



WE ARE HERE TO HELP
Would you like to speak to one of our financial advisers?
Our team is happy to answer your questions.
AlphaLAW - Fintech Services Advisory Group in EstoniaAlphaLAW - Fintech Services Advisory Group in Estonia