There are two types of cryptocurrency license activity that can be applied for in Estonia.
The first one, is to be a provider to exchange virtual currency to fiat currency and vice-versa.
The second one is to be a provider of virtual currency wallet service.
Both licenses have the same legal, operational and tax framework.
The operating licenses are issued by the Estonian Financial Intelligence Unit (FIU). An application for such license shall be processed by the FIU within 30 working days as of the date of submission of the application. If applied together, two applications should be submitted, and two different licenses will be issued.
The initial step on securing a future as a successful cryptocurrency exchange is to seek licensure.
What are the Legal Requirements?
Firstly, you need the equivalent capital of just €2,500 which should be deposited in the company bank account as proof. Once secured, we will be able to open proceedings that should lead to the granting of an Estonian cryptocurrency license. The company must be legally registered and fulfil a number of criteria including a minimum of one shareholder, one board member, and three council members. One of these people should be designated responsible for communications with legal bodies, for international finance administration and for the anti-money-laundering.
- All company shareholders may also act in a capacity of board member
- The person responsible for the anti-money-laundering measures is to monitor client activity. These measures also include understanding indicators that are suspicious and may denote terrorist activity. Should this happen, this person must report the matter to the Estonian authorities.
Taxation and Accounting Matters
Joint stock companies are not eligible for VAT (Value Added Tax) on their financial services. Registered companies pay a 0% tax rate in their income. There are, however, several other taxes about which you should be aware:
- A 33% social tax on personal income
- A 25% tax payable on dividends upon withdrawal of funds
- A 20% state tax on personal income
Registered cryptocurrency exchange companies in Estonia can expect to pay around €100 per month for legally-required accounting services. Other costs include a €300 approximate charge per year for the legal address and company administration. This is notable as overheads are much cheaper for a cryptocurrency exchange provider than for electronic money services and private investment.
Steps to Acquiring a License
Once you have ensured you have the correct capital and the company is established to the guidelines, there are several steps and requirements to follow. We can help you achieve this; the details are set out below on what you need to do or what we require from you to proceed with each stage.
Setting up the Company
Here, we will require you to notarize a power of attorney to one of our authorized specialists. You can compile this in your native language and we will organize the translation into Estonian which is a legally required step. Then we can incorporate a company in Estonia and open the corporate bank account to begin trading. We will need the following from you to set up the company: a scanned copy of your passport. If you are married, we will also need your marriage certificate as full disclosure of dependents is required here. This is for checking in case shares are sold to another party. Contact details for the company founders including legal place of residence and email address, and telephone numbers – landlines and cellphones, and any social media contact such as Skype and FB Messenger. Details on the company name, website, and office hours contact details. Further, we will also require a statement on the nature of the business.
Only when the registration is complete can we proceed to obtaining the license.
Applying for a License
The Estonian regulator issues the cryptocurrency exchange license upon receipt of the following information:
- Phone number, email address and website of the company registered in Estonia. Also required are the contact details of shareholders, and people responsible for delivering the services of the named company. Further, they will require the same contact details of the company’s legal representative and information details of internal control of the company
- Details confirming that the shareholders and members of the board have no convictions issued from the country of residence
- It is a legal requirement that the company adheres to rules and procedures when handling cryptocurrencies. A person most be nominated as responsible for such compliance and Estonia requires that this person is named
Interested? kindly fill in the form below and we shall get in touch with a proposal.