Cryptocurrency license in Estonia

Estonia has become one of the most successful post-Soviet countries that have improved its economic condition by supporting the IT industry. Now the country maintains these traditions and has become one of the first in the EU to establish stable rules for regulating cryptocurrencies. It leads to more and more organizations that intend to earn on such assets appearing here. The Estonia crypto license is a good solution for everyone who wants to work legally and openly, actively develop and attract new investments.

How can I use crypto assets?

The court in the EU recognized crypto assets as a legal means of payment. However, it left the right for each country to determine the legal regulation of such assets. From a legal point of view, it is perceived more as a commodity, not as electronic money.

If both parties agree, you can quickly sell and buy goods and services using such assets.

In addition, you can trade and mine without breaking the law here. Thus, it does not matter how exactly you want to use crypto assets; here, you can do it entirely legally.

The price of a crypto license in Estonia

The cost of a crypto license consists of several indicators – the state fee and the services of our company.

Previously, the state fee was 3,300 euros, but this amount was increased to 10,000 euros.

You need to contact our specialists to find out the cost of our services. They will tell you the complete list of services provided, and you can decide what you can do on your own (for example, find an office and recruit staff) and what is better to entrust to qualified lawyers (preparation of documents, checking the company’s readiness for licensing, etc.).

Taxation for cryptocurrency companies in Estonia

As already mentioned, relatively simple taxation rules apply in Estonia. Thus, financial transactions using such assets are not subject to VAT, and there is a zero income tax rate. However, you need to pay an income tax – of 20%. You also need to pay a staff tax of 3%. We advise hiring a local accountant to deal with our tax matters. It will allow you to work entirely remotely and not be afraid of legal problems.

Requirements for applicants

Estonia’s cryptocurrency regulation sets quite strict rules for organizations that want to get a license here. Among the most important are the following:
  • The authorized capital of more than 12 thousand euros;
  • Physical office in the territory of this country;
  • The security specialist must be of local nationality;
  • No criminal record for all team members;
  • A bank account must be opened at a local bank.
Usually, companies are fine with compliance with the above requirements. However, finding a bank to open an account for a crypto organization may be difficult. The fact is that many banks consider this industry to be associated with high risks. 

So, you should find a foreign bank that operates in the country where you can open an account.

If you want to ensure your company complies with the requirements of government regulators, you should contact our company’s specialists. They will carefully study your organization’s activities and tell you what changes need to be made.

To get a crypto currency exchange license, you must adhere to the KYC/AML policy. Your organization must verify customers and ensure they do not use your firm for money laundering or financing terrorism. So, each client must provide documents confirming their identity and location. Your company should employ a specialist to ensure that all your employees and customers comply with the requirements to prevent fraud and money laundering.

Types of crypto licenses

Which type of license to choose depends on what kind of Estonian cryptocurrency services you plan to provide.

So, if you want to make money on the exchange of currencies (fiat for crypto or crypto for crypto), you need to get a work permit for exchanges.

But, if you plan to store assets and charge for them, you need permission to work for e-wallets.

You must obtain two kinds of permits to provide both types of licenses.

If you need help figuring out which type of permit suits you best, you should contact the specialists at our company. They will conduct a full consultation and develop a strategy for obtaining a license.

VASP license: primary requirements

Previously, Estonia’s cryptocurrency regulation offered to obtain 2 types of licenses – for exchanges and wallets. However, then it was decided to combine them into one VASP license. To get such a work permit, you must meet the following requirements:
  • The organization must be registered in that jurisdiction;
  • Thoughtful business plan;
  • Conducted risk analysis;
  • The authorized capital is more than 100 thousand euros.
You have to think through how your organization will function to the smallest detail – services, business model, funding, employees, and more. A non-resident has the right to open an organization in this jurisdiction, but you must hire a director and a resident security specialist. These specialists must have experience in the relevant position, specialized education, and excellent results. None of your specialists should have a criminal record or other problems with the law. Also, your organization must ensure that your services are not used for money laundering and financial terrorism. You must verify each user and store data about all transactions. You must carefully assess the risks and consider how to minimize them.

Required documents

Obtaining a cryptolicense is a rather complicated process that involves collecting the necessary documents. You have to go through several stages of verification, for each of which you need to order a separate package of papers:
  • KYC/AML procedures;
  • Procedural rules;
  • Risk assessment procedure.
Please entrust the collection of documents to specialized lawyers. You must provide them with complete information about your organization, and based on the data received, they will collect the necessary packages of documents. A person with a legal education is likely to be able to do this correctly.

How to get a cryptocurrency license in Estonia?

Obtaining a crypto license in Estonia is a rather complicated process, which takes about 14 weeks on average. You have to go through several necessary steps.

1. Obtaining e-residency

To conduct business in this jurisdiction, you must have citizenship of this country or an e-resident card. To do this, you need to submit documents to the relevant department, where you need to present a business plan and complete information about the future company.

2. Reservation of the name of the organization

Your organization’s name needs to be unique, so consider several options and test them for uniqueness. After that, you can reserve the name that you like the most.

3. Company registration

It would be best if you rent an office and collect the necessary documents (application, copies of passports, corporate papers, etc.). Registering a company takes 2 weeks on average.

4. Registration of the taxpayer

You need to register companies with the Tax and Customs Board. You will then receive a unique tax number.

5. Preparation of documents

Before applying for a license, you must prepare a complete document package and ensure that your organization meets all the requirements. It is better to give this stage to specialized lawyers who will check the correctness of filling out the papers.

6. Personal interview

Your company’s director and security specialist are residents of the country. They must have all the information about your organization and a good reputation. Experience in relevant positions and relevant education. They must come for an interview at government agencies and represent your interests here. You can go to Tallinn without going to Tallinn.

7. Open a corporate account

After you receive a crypto license, you must open a bank account. As mentioned, this can be problematic, so you should consult in advance and choose the most suitable bank. It usually takes 4 weeks to open a bank account.

Cryptocurrency regulators

This country was previously part of the USSR; therefore, after gaining independence, it economically lagged far behind its European neighbors. Then the country’s government began actively supporting the IT sector, which allowed it to develop and bring billions of euros to the budget. With the advent of the crypto industry, this country has become one of the first to create relatively simple and understandable rules for regulation.

You can use cryptocurrency in Estonia as long as it does not violate the law on money laundering.

This country has several government agencies that control the activities of crypto firms (Ministry of Finance, Department of Financial Supervision and Settlement and some others).

Each of the above state bodies is responsible for certain aspects of the activities of crypto organizations. Our experts will provide a full consultation on how such firms are regulated in this jurisdiction and answer any questions you might have.

Application processing

Once you apply for a license, government agencies have 60 days to process it. If they have questions, they can extend this period up to 120 days. They may send you additional questions electronically. The sooner you answer them, the better.

Once the decision to grant you a license has been made, you will receive a notification. The work permit is indefinite, but you must regularly report on your activities. If government agencies notice errors or suspect you are fraudulent, they may revoke your license. It will be impossible to get it again since the most important thing here is the reputation, which will be irrevocably damaged.

How will the regulation of this industry change in the near future?

As already mentioned, the crypto industry in this country is regulated by the law on preventing money laundering, which has been amended. They will come into force in March 2023:
  • The authorized capital of at least 100 thousand euros (previously, it was 12 thousand euros);
  • The rules for customer verification have been tightened;
  • The business plan must be designed for at least 2 years;
  • The audit should be mandatory;
  • The state fee will be 10 thousand euros (previously it was 3300 euros).
The country’s government plans to tighten requirements for staff and the office’s meta location.

Why might you be denied?

There are several reasons why government agencies may refuse to grant you a license or revoke your work permit. Often this is due to the fact that organizations do not meet the basic requirements of state regulators, for example, they have too little authorized capital or a bad reputation among employees. In addition, when you make changes to the organization’s activities (change the staff of key employees, add new services, etc.), you must inform the authorities about this. If you don’t, you risk losing your work permit. Other common cause is a fraud, money laundering, or financial terrorism. The license is canceled as soon as the regulators notice that you are performing illegal activities.

The main advantages of obtaining a crypto license in Estonia

Obtaining a cryptolicense in this jurisdiction has a considerable number of benefits. To work legally in this jurisdiction, you must obtain a work permit. Otherwise, you may get into trouble with the law, and your platform will be completely blocked. Why Estonia? Having a work permit in this jurisdiction makes it possible to work legally throughout the EU. In addition, a crypto exchange license has the following advantages:
  • Favorable taxation;
  • Excellent investment climate;
  • Low reporting requirements and more.
crypto license
The government of this country has created favorable conditions for developing digital businesses. You can conduct business online from anywhere in the world, thanks to the e-Residency program. Such a program annually brings more than 1 billion euros to the country’s budget. In addition, many organizations like the tax system in this country. There is no corporate tax here, and you can reinvest your profits without paying taxes.

Our services

Our company specializes in helping to obtain a crypto license in different countries of the world. It employs lawyers with extensive experience who help crypto organizations with different profiles to obtain work permits.

If you wish, you can reduce your participation in obtaining a license to a minimum if you issue a power of attorney. In this case, the specialists of our company will be able to represent your interests in state bodies.

In addition, our experts will help you find an office and recruit qualified professionals who will meet all the requirements of regulatory authorities.

Conclusion

You must get permission if you are willing to work honestly and openly in this country. It is worth saying that obtaining a license here is much more complicated than in Lithuania or Poland. You need to have a legal education to understand all the intricacies. The specialists of our company will help to check the readiness of your company for licensing, collect the necessary documents and be able to represent your interests in state bodies.

FAQ

Any person who has not previously had a criminal record can create a crypto organization. But, your company must have a resident director.

Such a license is perpetual, but you must regularly report on your activities, and if the regulators notice errors or fraud on your part, they may revoke your work permit.

Yes, cryptocurrency organizations are subject to the same tax – 20%.

To obtain a work permit, you must register an organization in this jurisdiction, check whether your company meets the regulator’s requirements, and apply for a work permit.