Crypto license in Estonia

Opening and running a business in the EU.
When opening a company in Estonia, there is no need for passportization in other EU countries. Company registration takes about a week. Crypto exchange license Estonia costs are also one of the most loyal in the EU, provided that one license is issued for several types of activities. The license obtained in Estonia works in other EU countries. Opens up a market with more than 500 million users.

Well-regulated jurisdiction.
There are clear rules and regulations for obtaining a license, businesses operate in a safe environment, and customer confidence is increased. Estonia ranked 18th in the World Bank’s Ease of Doing Business Index.

One license for different types of activities.
From 2020, the jurisdiction will issue one license for all services related to virtual currencies. No annual renewal fee.This type of authorization makes it possible to officially provide services:

• Virtual asset wallets and storage services

.Generation and storage of encrypted keys for clients’ e-wallets

• Exchange of virtual currencies

.Cryptocurrency exchange license in Estonia makes it possible to exchange crypto-assets for fiat money or other cryptocurrencies and vice versa

• Cryptocurrency transfers and payments

.Transfer of funds at the client’s order to the specified details

• ICO (initial coin offering)

.Offer and sale of virtual assets on behalf of the issuer

High-tech environment.
Estonia has a well-developed IT sector, online voting, online payment for public services, registration, and business management is possible remotely thanks to e-Residency. The highest number of startups per person in the world is registered here.

Proven track record.
Estonia has strict requirements to fulfill AML/KYC procedures, companies are thoroughly checked for compliance with all business norms, which increases the credibility of the business and its operations.

In Estonia, the Financial Inspection Unit (FIU) makes sure that companies that plan to operate in the cryptosphere fulfill all requirements. The FIU reviews the documents for obtaining an Estonian crypto license within 60 working days, and if the FIU has questions about the completeness of the submitted data, the deadline can be extended for another 60 days.

To obtain a crypto license in Estonia, you need to fulfill the following conditions:

Register a company.
The business must be registered in the Estonian e-registry.

Realize all requirements regarding the main persons of the company.
All board members, shareholders, and founders must provide certificates of absence of criminal records, not to be associated with offenses related to money laundering. They must also provide identification data and place of residence, and copies of passports must be notarized. At least one of the board members must be a resident of Estonia. In addition, board members must have higher education and at least 2 years of experience.

Have sufficient financial capital.
The company needs to prove its financial ability to run the business and cover all the risks of the business. To be able to exchange cryptocurrencies, the applicant has to contribute the authorized capital of at least EUR 100 thousand; to provide payment services from electronic wallets, the authorized capital is EUR 250 thousand.

Have an office.
The company must have a physical office in the jurisdiction. The company needs to provide a phone number and email address.

Implement AML and KYC procedures.
A compliance officer should be appointed. Present developed AML rules, according to the Prevention of Money Laundering and Terrorist Financing Act, International Sanctions Act, Article 9 of Regulation (EU) No 910/2014 of the European Parliament.

Develop a business plan and have a website.
The company should provide a 2-year description of its activities and create a corporate website.

Plan the audit of the annual accounts.
When applying, provide details of the auditor who will conduct the audit and provide information to the FIU.

Provide data retention.
Business records are retained for 5 years after the company is closed. During the life of the business, the service provider must provide documents and data upon request of FIU or law enforcement agencies.

Open a bank account.
Have a corporate bank account in any EU or Estonian country.

Pay the fee for obtaining a license.
Before applying, pay the fee – EUR 10 000.

The main controller of the Estonian financial sector is the Financial Inspection Unit (Rahapesu Andmebüroo – RAB. Financial Intelligence Unit, FIU), its activities are subordinate to the Ministry of Finance. This regulator monitors the compliance of businesses with all norms of such legislation as:

• Law on the Prevention of Money Laundering and Terrorist Financing of March 15, 2022.
• Directives of the European Parliament and the Council of the EU 2015/849 (4th AML Directive, 4AMLD)
• Directive of the European Parliament and the Council of the EU 2018/843 (5th AML Directive, 5AMLD)
• Draft Regulation of the EP and Council of the EU 2020/593 (Markets in Cryptoassets Regulation, MiCA)

Regulatory features that apply to cryptocurrencies include:

• Pay for the authorized capital of the company only in money (not less than EUR 100 thousand -or EUR 250 thousand depending on the services provided).
• Carry out verification, and identification of natural persons/clients, according to the Law on Identity Cards 
• Amount of own funds, calculated on a scale depending on the services offered
• Audit of cryptocurrency companies is mandatory

With the passage of the Anti-Money Laundering Act on March 15, 2022, and amendments on April 1, 2022, and rule changes from FIU, new changes have been introduced for crypto licenses:

• Previously, two types of licenses were issued, now everything is combined into one license
• FIU has increased the application processing time from 30 days to 60 days with the possibility of extending it for another 60 days
•  Application fee from EUR 3,300 to EUR 10,000
•  A Bank account can be opened at a bank or PSP.
• The amount of share capital has changed from EUR 12000 to EUR 100000 (EUR 250000) depending on services
• The Regulator has more powers to refuse to issue a license or revoke it (especially if there is a suspicion of money laundering operations).
• Cryptocurrency companies must be active in Estonia for at least 6 months.

It is mandatory for a company in Estonia to pay the following taxes:

• 25% in case of dividend withdrawal
• 33% social tax
• 20% income tax
• 20% VAT

Also established:

• 0% on retained earnings
• 0% on capital gains
• 0% on inheritance
• ICO projects are not taxable
• Bitcoin currency transactions are not subject to taxation
• Payment and currency exchange services are exempt from turnover tax, according to the Turnover Tax Act.