Global Registration

License of Cryptocurrency in Estonia

Estonia is a country that is known for its innovation and digital technology. The country is a part of the European Union and adheres to general laws. Since the innovation of blockchain technology^[1], the demand for cryptocurrency has been an uprising. The country provides the companies to offer two types of virtual digital services to its customers by making transactions and transfers in the name of clients or on their behalf. Obtaining a licence for Cryptocurrency in Estonia offers a suitable platform to the companies so that there will be less hindrance in the process. The rule of cryptocurrency in Estonia is governed by the Anti-Money Laundering and Prevention of Terrorism Financing Act. The present article will simplify the licencing procedure and provide for the fee requirement.

Benefits of taking a license of Cryptocurrency in Estonia

The benefits of taking a licence of cryptocurrency in Estonia:

1. Progressive approach toward Cryptocurrency: Estonia is one of the countries that regulate the cryptocurrency market and has introduced various laws and regulations that regulate virtual currency in their financial market. The country has significantly made various amendments to their laws to suit the needs of the changing financial market and provides a robust licensing system. The country even allows foreign companies to operate in the country, provided they have a branch at their registered address. The country’s progressive approach makes them have the most updated regulatory system compared to other member nations of the European Union.
2. Simple Application Procedure: The country offers a streamlined method of filing an application with the regulatory authority. The authority generally approves the license e of cryptocurrency in Estonia in less than 60 days, giving them the advantage in the application time period as compared to other countries. Moreover, the country now offers a single license, i.e. Virtual Currency Service, for crypto trading and wallet licenses. The single application process will reduce the company’s extra cost and provide clarity over the application process.
3. Approachable to EU Market: Estonia is a part of the European Union offers the country the benefits of accessing the market of other member nations without any duty. The company offering services of Cryptocurrency in Estonia can expand its services to other European nations without any cost of applying for additional authorisation. This will allow the company’s scope of preparations and provide services to a vast customer base.
4. Taxation benefits: The taxation of Cryptocurrency in Estonia is the same as that of taxation on any corporate. The cryptocurrency is taxed only when it is converted into any currency, exchange of cryptocurrency into another cryptocurrency, or using the cryptocurrency to pay for goods and services. However, the tax is not levied on any profit retained and any profit reinvested by the company. But, the tax will be levied if the profits are used for distribution to stakeholders.
5. Business can be Remotely Managed: Estonia offers the company to operate the management of the company from anywhere in the world.The county offers an e-residency program to a foreigner that gives access to the same services available to the resident.

Who is the RegulatoryAuthority?

The regulatory authority that manages the authorisation of obtaining licences for cryptocurrency in Estonia is Financial Intelligence Unit (FIU).

What are the Requirements under new regulations for Cryptocurrency in Estonia in 2022?

The amendment has been brought under the Anti-Money Laundering and Prevention of Terrorism Financing Act which has brought significant changes to the blockchain industry and its requirements with authority. The current legislation provides that the below-mentioned requirements are to be fulfilled to obtain a license of cryptocurrency.

S.no.	Requirement
State Fee	The state fees for licensing applications are: New Applications: Euro 10,000Amendments in the Application: Euro4,000
Share Capital	The capital requirements if the services offered are: Virtual Currency Exchange, Virtual Currency Wallet, ICO and arranging of virtual Currency offer: Euro 100,000Virtual Currency Transfer:Euro 250,000 The source of funding must be appropriately disclosed.
Board of Management	The requirements for the board of management are: The board of management shall be located in EstoniaThe investors and the board of management shall have no prior convictions concerning economic activities and should have declared fit and proper to conduct their business activities.The board member shall possess at least 2 years of Expertise in law, auditing, finance, accounting, public or administrative management or IT.Any board member cannot hold the position in more than 2 companies engaged in cryptocurrency activities.
Anti-Money Laundering Officer	The company shall appoint an AML officer who must advise and comply with the provisions of the AML Act. Along with that, the AML officer must possess: Necessary knowledge and holds experience in the field of AML.Candidate’s permanent place of work is in Estonia.AML office can hold the position only in one cryptocurrency in Estonia Further, the AML officer can be invited for an interview by the FIU to judge their competency.
Place of Business	The company willing to start a business of Cryptocurrency in Estonia shall have its place of business or its main branch registered in the country. The company shall abide by its obligations and only offer services that are enlisted in its objectives.
Auditing	The companies engaged in the business of Cryptocurrency in Estonia are required to conduct auditing of their accounts. The company may appoint an external auditor.
Business Plan	The company willing to obtain a license for Cryptocurrency in Estonia shall prepare a business plan that will include all the business activities, services, strategies, prospective customers, estimated income and expenses and other information, and it shall be presented for at least 2 years.

What is the procedure for obtaining a license for Cryptocurrency in Estonia?

The new amendments have made it mandatory for the regulatory authority to keep a strong check on the activities of businesses operating in the field of Cryptocurrency in Estonia. The procedure for obtaining a license for Cryptocurrency in Estonia is:

Step 1: Registration of a Company

The first step in the process of obtaining a license for Cryptocurrency in Estonia is the registration of the company. The company can be registered as a Private limited company or a Public Limited Company. It can be registered by a person holding an e-residency or by a person. The applicant can make the application through an online application or a notary. It is also necessary that the company shall have a bank account (IBAN) for the purpose of depositing the capital and conducting business activities.

Step 2: Registered Address and Appointment

The company shall have to open a branch at the registered office. It shall appoint a local director who will be responsible for the management of the conduct of business in Estonia.

Step 3: Appointment of AML officer

The company shall appoint an Anti-Money Laundering officer who shall be responsible for all the company’s compliance processes with authority. It is required that the AMLL officer appointed shall possess the requisite knowledge and is a permanent resident of Estonia.

Step 4: Application to FIU

After preparing all the documents and appointing all the requisite managerial personnel (AML officer, Board of members and Local Directors), the company shall apply to the Financial Intelligence Unit (FIU). The FIU will receive the application and call the AML officer for the interview.

Step 5: Time period of granting the licences

The FIU will review the application within 60 days of receiving the application, and if the authority is satisfied, they will grant the license. If there is any discrepancy in the application, the same will be returned, and an extended time period of 60 days will be provided. After the provision of extended time, if the company cannot meet its obligation, the FIU will reject the application for a license of Cryptocurrency in Estonia.

Conclusion

Estonia is a country of digital technology; it is one of the few countries that has offered more than 1000 licenses to companies operating in the services of Cryptocurrency in Estonia. The laws of Estonia are framed to provide a smooth application process for obtaining a license for Cryptocurrency in Estonia. The country is a hub of various Cryptocurrency entrepreneurs who are operating their business either remotely or through in person. The laws are famed for easing the process of application filing. Estonia is quick in providing the license for cryptocurrency in less than 60 days. Moreover, to protect the interest of the customers and investors, the companies offering the service of cryptocurrency in Estonia are under the scrutiny of the FIU.

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