For most investors looking to set up a cryptocurrency business, they will be deciding between Malta and Estonia. Although some companies have chosen to apply for a Malta cryptocurrency exchange license, Estonia is emerging as the more popular option. Estonia is one of the most technically advanced country in Europe and is one of the first EU country to legalize cryptocurrency-related businesses. Till date, around 900 licenses have been approved for digital asset exchange platforms and cryptocurrency wallet providers.
In Estonia, cryptocurrency licenses are regulated by the Estonian Financial Intelligence Unit (FIU). In order to qualify for the licenses, your business has to meet various KYC and AML and CFT regulations set by the FIU. Businesses registered in Estonia are legally operating in the EU and they are required to follow and adhere to local and European laws.
Foreign investors are allowed to set up their cryptocurrency business without being required to be physically in Estonia. The FIU will review and approve the license within 30 working days and the business must begin operations within six months of license application.
Types of cryptocurrency licenses in Estonia
In Estonia, there are two types of cryptocurrency licences that cryptocurrency companies can obtain. Firstly, a cryptocurrency exchange service provider licence allows a company to provide exchange services to those interested in trading cryptocurrencies against fiat currencies or other cryptocurrencies. Secondly, a cryptocurrency wallet service provider licence is issued to companies which are looking to offer e-wallets or virtual token wallets.
For other types of cryptocurrency businesses such as mining, investors are not required to apply for any license unless they are involved in trading of these virtual assets.
Reasons to choose Estonia
Over the years, Estonia has advanced into a prime fintech hub for many investors. The Estonian government is crypto-friendly and encourages foreign investors to set up crypto businesses in the country. With its reputation as a global fintech hub, attaining an Estonia cryptocurrency license is deemed as a prestigious accolade by many. Unlike many other countries, Estonia has come up with strict cryptocurrency regulations which serve as reassurance to business owners as well as their valued customers. In addition, doing business in Estonia is straightforward and you will get to enjoy its transparent taxation system.
Stricter regulations in the near future
In recent years, Estonian government has reinforced the need for stricter regulations for cryptocurrency businesses due to increasing number of risks involved. The government is planning to introduce a bill with numerous additional requirements for cryptocurrency license application.
“We have learned our lesson from the banking sector the hard way, and we must now deal with new international risks, and cryptocurrencies are amongst the most urgent of these,” said Estonia’s minister of finance, Martin Helme.
One proposed change is increasing the application processing time from 30 to 90 days.
In addition, the registered office address and the board of directors may be required to be in Estonia in the future. Estonia government is also planning to increase the license application fees and annual renewal levies of cryptocurrency licenses. Once the bill is introduced, existing license holders are required to meet the new requirements before December 31, 2019.