If you want to do business with cryptocurrencies within the EU, a jurisdiction analysis is highly recommended to avoid nasty surprises.
When it comes to crypto businesses, there are some jurisdictions that are undoubtedly more favourable than others. Some of them are well-known, others not so much.
In this article we provide information on Why Consider Estonia for Cryptobusiness?
Estonia for Crypto in Brief
- While not the first or only jurisdiction to offer crypto licenses, Estonia offers a simple licensing environment with a single license for crypto exchanges and e-wallets.
- Most of the processes to obtain an Estonian crypto license can be done through the digital platforms provided by the government.
- Estonia is probably the most digital-friendly country in the EU.
- The FIU is responsible for the entire process and has links to Estonian Police and Border Guard Board. The reason for this is simple: Estonian authorities want to minimize the risk of money laundering activities and can therefore allow simplified customer due diligence, resulting in a virtuous circle of low risk and easy applications.
- At the moment, Estonia is the best EU country for crypto transactions, because Estonia is one of the pioneers of blockchain technology. It was one of the first countries to offer business licenses for cryptocurrencies.
One license - Many Purposes
The Estonian single crypto wallet and exchange license allow you to handle all primary crypto operations with only one license.
This is very effective and helps you save a lot of time as you do not have to apply for different licenses for many different purposes. Only one license for all major operations and you can get it in 60 days.
The license comes with EU passporting rights, which means that you can operate your crypto business in other EU countries without needing additional licenses or establishing a branch in other countries.
Passporting or passporting rights are the exercise of the right of a company registered in the EEA (European Economic Area) to do business in another EEA country without having to seek further authorisation in that country. In simple terms, it is a type of passport that financial institutions obtain in order to conduct business throughout Europe.
The EEA Agreement, created in 1991, is an area in Europe that allows the free movement of goods, services, capital and people.
The following EEA countries currently have passporting rights: Austria, Belgium, Bulgaria, Croatia, Cyprus (South Part of the Island), Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.
Good Digital Infrastructure
The government has been instrumental in creating IT infrastructure and services for the people so that they can vote online, register a business in 15 minutes, or pay taxes online in just three minutes.
There are very few places in Estonia that do not have a Wi-Fi connection. The country also funds special programs for students to develop their IT skills.
All this means that Estonia is the ideal place to run a blockchain business in a high-tech environment.
Free Economy in Estonia
Estonia included in the list of 10 (ten) freest country economies in the world according to the index of Economic Freedom.
The country enjoys unprecedented fiscal health, the financial sector has a respected and efficient regulator, and foreigners enjoy the same rights as locals. As a result, the economy has grown by an average of 3-4% over the past five years.
Estonian Attractive Tax System
Estonia has a top corporate tax rate of 20%, which is the seventh lowest in the EU. A reduced rate applies if the company's taxable profit is less than or equal to the average of the three previous years.
However, Estonian Tax System system has two major advantages:
- Undistributed profits are tax-free, meaning that any profits reinvested in the company are tax-free.
- The tax system is territorial, meaning that income earned abroad is completely tax-free.
Estonia's Single License for Crypto Exchanges and E-Wallets
Companies working with cryptocurrencies can apply for single crypto license in Estonia that allows to provide following services:
- Crypto exchange activity: for providers of services to exchange a virtual currency for a fiat currency, allows to exchange fiat for crypto, crypto for fiat and crypto for crypto.
- Crypto wallet activity: for providers of a virtual currency exchange service, allows to offer a virtual currency wallet service for a business that generates security keys for its customers or stores their encrypted keys. These keys can be used to store or transfer virtual currencies.
Operating license (Crypto license) is issued by Estonian Financial Intelligence Unit (FIU), which is an independent structural unit of the Police and Border Guard Board of Estonia.
The company is classified as a financial institution, although it currently has no additional tax requirements. The accounts must be kept as for any other company registered in Estonia.
No special reports to the supervisory authority are required. However, the FIU reserves the right to investigate the activities of the authorized companies at any time.
Registering crypto business in Estonia can be done remotely, and generally the licensing process can also be done remotely through a representative, like our company AlphaLAW.
The process is usually speedy and straightforward and takes up to 60 working days. To obtain a crypto license, a company must be registered in Estonia or a branch of a foreign company must be registered in Estonia. We recommend choosing a local company rather than a branch, as registering a branch is more complex.
Contact Us for Establishing your Crypto Business in Estonia
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 in Estonia. Based on the needs of our 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.