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Posted By: agha khan | 25 Jun 2018

Cryptocurrency Businesses - What You Need to Know

Licenses For Cryptocurrency Businesses in Estonia

 

Estonia is one of the most technologically savvy countries in Europe. It has implemented legal regulations with 2 types of licenses for business activities with virtual currencies. It also has a favorable tax policy, where cryptocurrencies are not subjected to any special tax, e.g. VAT. No limit on the amount of the virtual currency investment, legal framework and low operating cost makes that country the best location for running a cryptocurrency-related business.

Estonia decided to open up to cryptocurrencies. This country’s politicians understood early on that opportunities in this area are plenty and business activity is vast. And therefore, they realized that the best response to virtual currencies is not to limit them, but to embrace the technology and try work with it. At the same time companies expressed strong interest in having clear regulations to be able to operate in a stable business environment. They felt it is high time to leave the grey zone and conduct business with the certainty that all activities are legal.

 

Cryptocurrency Licenses In Estonia

Entrepreneurs can apply for 2 types of licenses for two categories of activities.

  • Providing services of exchanging a virtual currency against a fiat currency. This license allows a company to run transaction platforms where it is possible to exchange a cryptocurrency to fiat, fiat to cryptocurrency and also cryptocurrency to cryptocurrency.
  • Providing a virtual currency wallet service. This license allows a company to provide platforms for accessing, managing and storing cryptocurrency credentials known as keys. If their storage is offline, it is called cold storage, if it is in anyway connected to the Internet, it is called hot storage.

 

License Requirements

To obtain either of those licenses, a company has to prove that all related persons (for instance: board members, shareholders) have never been punished for a criminal offence, especially against the authority of the State, or for a criminal offence related to money laundering. The company is obligated to send also their notarized passport copies, CVs and, as mentioned above, a certificate from the register of convictions. Moreover, the company has to describe its planned business activity and send the company’s website address. The most difficult requirement is preparing internal rules of AML procedures. This document has to be written in a professional manner This is why it is recommended to take advice from specialists. For the avoidance of doubts, there is no requirement of minimum share capital of the company applying for any of the licenses. However, the company has to be registered in Estonia. Fortunately, the company does not need to be previously registered for a minimum time and it can apply right away upon registration in Estonia.

Timeframe

The company receives the decision of the Financial Intelligence Unit (FIU) within 30 working days. During that time FIU can ask the contact person to provide additional information contained in the application. It is important to note that each type of license requires a separate application and procedure with the FIU. This also means the company will hold 2 different licenses.

 

Regulations Of Companies That Hold One Or Both Types Of License

Except few legal requirements to obtain the licenses, the companies who hold one or both are not obliged to conduct any special reporting to tax authorities. The company is to follow standard accounting rules applicable to its type.

 

Cryptocurrency Business Made Quick & Easy

With its clear regulation, open-minded approach of the authorities who treat entrepreneurs as partners, high level of digitization of all government agencies, Estonia is among the most business-friendly countries for cryptocurrency companies. It offers one of the world’s fastest procedures for obtaining license for this type of activity. Thanks to e-residency, you might not even have to arrive in Estonia. On top of it, all documentation can be submitted in English and the national currency is the euro.

About the author

Artur Kuczmowski has been dedicated to legal, tax and business consulting since the very beginning of his career as a lawyer. From 2007 to 2018, he used to run his own law practice. He is the co-initiator of the international group of boutique law firms – Thompson&Stein, which was founded in 2015. He not only is responsible for the polish branch of the firm but also he coordinates Thompson&Stein in Estonia. Mr Kuczmowski has led several workshops about Estonian partnerships and give a lecture on international corporations in Estonian Company law.


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