Crypto license obtainment in Estonia
Estonia allows companies to legally provide customers with services of exchange, transfer and storage of crypto and virtual currencies based on the following licenses:
- License of the provider of services of exchange of virtual currency for fiat currency
- License of the virtual currency wallet service provider
Benefits of obtaining a cryptocurrency licence in Estonia:
- company protection from suspicion of money laundering
- Due to the new regulations regarding cryptolicense in Estonia, a company that meets all the necessary Estonian requirements for this licence will be protected from all sorts of checks for suspicion of money laundering and possible closure of the company, as it is regulated by the Estonian AML legislation on a par with financial institutions.
- low tax rate
- A clear example of low taxation is the zero percent corporate income tax. Thus, this profit can be invested in the development of the company, which is ideal for a start-up business. As for turnover tax (VAT), it should be noted that bitcoins and altcoins will not be subject to this tax. Estonia has the lowest and most affordable prices for cryptocurrency licences compared to other EU countries.
- online company management
- Estonia is known to be a leader in internet technology, which has been developing more and more in recent years. This achievement makes it possible to open access to all government services, which in turn makes communication with government organisations easier and saves You time.
Estonia is an attractive jurisdiction for starting a cryptocurrency business
Before the strengthening of requirements for cryptocurrency businesses, it was easy to obtain a cryptocurrency licence in Estonia in a short period of time, with crypto-assets that could be handled from anywhere in the world. This favourable and easy registration environment for cryptocurrency companies has triggered their rapid growth, which in turn has increased industry risks and led to stricter regulations for cryptocurrency licences, applying the Resolution on Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT).
Another main reason for this strengthening of regulations was the discovery of suspicious transfers amounting to more than a hundred billion dollars in one Estonian branch of a Danish bank called Danske Bank. There are now only about 400 licensed cryptocurrency companies in Estonia. For this reason, it is very important to have the right kind of help for starting a cryptocurrency business, which is exactly what our company Adam Smith can provide.
New cryptocurrency business rules in Estonia in 2022:
- Due to the updated regulations regarding cryptocurrencies, all necessary documents for cryptocurrency licences must now be submitted either to a notary’s office or through the Commercial Register website, the review process has lengthened twice and is now 120 days instead of 60 as it was before.
- As for having a physical office, this is currently a necessary requirement for obtaining a crypto licence. In turn, this office presence can improve management and control of the company, as well as protect the assets and rights of clients.
- For cryptocurrency companies in Estonia, the mandatory requirement is that at least one general manager of the company is an Estonian resident.
- In order to obtain a cryptocurrency licence, the regulator requires an account to be opened with a European payment system or bank. However, this process often requires skilled legal assistance, which our firm Adam Smith can offer; we will find the best banks to open a bank account for your cryptocurrency business.
- The share capital for obtaining a crypto licence is currently equal to €100,000 or €250,000.
- Also, another change is that all members of the company must have a spotless reputation without any criminal record or involvement in fraud. Along with this, all members of the company will also be required to present non-conviction certificates. This can also be confirmed by the fact that with the introduction of new regulations concerning cryptocurrency activities, these services have become subject to regulation by the Estonian AML legislation, which previously applied to financial institutions only.
Requirements
- Company shall have a corporate account opened at Estonian Bank or at a European Payment Institution with the right to provide services in Estonia
- Minimum share capital of Estonian VASP company shall be 12000 EUR
- Company needs to have a physical office in Estonia with the necessary equipment
- At least 1 board member has to be a resident, physically located in the country, and take part in the activities of the company
- All the major actors of the company (Shareholders, Directors, key employees) must be in good standing. To prove that, they are required to provide the regulator with certificates of no criminal record in the country of citizenship
- Company shall have and follow their AML/KYC policy, risk control, and monitoring rules
- The VASP company in Estonia shall be maintaining and storing client data that can be provided to the regulator if necessary
- Company is obliged to regularly collect KYC (customer due diligence) data of the clients
- Company’s directors and AML officer shall have profile education, skills, and experience in cryptocurrency activities of company employees
Advantages
- There is 0% tax on the retained earnings. If profits are distributed – 25% tax on dividends. The rate of this tax may be reduced to 14% on regular distributions. When paying salaries to non-residents no tax is paid in Estonia
- Regulation with financial institutions
- The well-developed banking system
- Estonia is a digital country, everything can be done digitally, no papers
- Legal crypto activities
Please, contact our specialists for more information about fees and personal requirements for your project.