CryptocurrencyEstoniaBeginners’ Guide on How to Get Estonia Cryptocurrency License in 2023

September 2, 2022by Tetra Consultants0
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Deciding on which countries to expand your business to can be a complex and difficult decision.  As an aspiring entrepreneur, you might have heard of the lucrative business environment of Estonia and might specifically be wondering about how you can set up a cryptocurrency company in Estonia successfully.  In this article, Tetra Consultants will not only provide a beginner’s guide on how to obtain an  Estonia cryptocurrency license , but also explain the key advantages of cryptocurrency related companies so that you may better understand this business phenomenon and make a more informed decision about whether you should obtain an Estonia cryptocurrency license as well. 

This article will be divided into 2 main segments.  Firstly, we will explain what are the major advantages of cryptocurrency companies motivating many to start such companies in Estonia.  Secondly, we will go over the process and steps to starting such a company and most importantly, obtaining an Estonia cryptocurrency license.

Estonia cryptocurrency license

Benefits of Cryptocurrency Companies

1. Greater privacy and security for your assets and holdings

One of the major reasons for why many businessmen decide to set up cryptocurrency based businesses in offshore locations is due to benefits accrued to privacy and security maximisation.  While such digital currencies and their owners are already kept separate, through the setting up of an offshore cryptocurrency company, even more secure levels of protection will be provided to your assets, especially digital based ones.  As such, ensuring that your international business company (IBC) remains based in such forms of digital currency provides unique security benefits to you.  

2. Tax benefits 

By having a significant proportion of your money stored offshore in the form of virtual currencies like Bitcoin, this can greatly lower any tax burdens faced by your company in the home country.  Furthermore, many countries within the European Union (EU) such as Belgium and Finland usually view cryptocurrency as a financial related service or commodity, instead of a usual currency.  Due to this trend, the governments of such European countries, and many other Western countries including Singapore, have been willing to offer exemptions from Value Added Taxes (VATs) or sales taxes for such crypto currency based businesses.  

Hence, by setting up an offshore cryptocurrency company, you can gain unique tax advantages to reduce the costs accrued to your business in the form of taxation.  Now that you have a better understanding of these key benefits, you may be wondering about how you can start your own cryptocurrency company as well, specifically in the wonderful business environment of Estonia.  The next segment in this article will explain to you the process of registering your cryptocurrency there so that you may gain a better understanding about the steps which need to be taken.  

Licensing Requirements for Cryptocurrency Companies in Estonia

First and foremost, it is important to understand what the 2 main types of cryptocurrency licenses are in Estonia, namely the cryptocurrency exchange service provider license and the cryptocurrency wallet service provider license.

Firstly, the Estonia cryptocurrency exchange license grants the company the ability to exchange services with individuals or other businesses intending to trade cryptocurrencies for money, digital assets or other forms of cryptocurrencies.  In contrast, the second type of cryptocurrency license, the cryptocurrency wallet service provider license, is issued to companies providing virtual token wallets or electronic wallets for their clients to store such digital assets, as its name suggests.  Thus, the very first step to acquiring a  Estonia cryptocurrency license is to identify which license is more appropriate for your business and the activities it engages in.

However, it is important to take note of the key exceptions to these licensing regulations, where certain businesses dealing with cryptocurrencies need not obtain these special licenses.  For instance, one type of company which falls into this exceptional category are Information technology (IT) companies engaging in digital token mining activities like Bitcoin mining.  Such types of companies do not have to act in accordance to stipulations regarding the acquiring of such cryptocurrency licenses like others do.

Process of Obtaining an Estonia Cryptocurrency License

In order to successfully apply for these cryptocurrency licenses, an official application must be submitted to the Financial Supervisory Authority via the Estonian government’s Financial Intelligence Unit.  The relevant information which needs to be provided in this application includes the company’s official certificate of incorporation, as well as a know your client and risk assessment documentation.

However, submitting the relevant documents is not the only step to obtaining your cryptocurrency license; the success of your application is also dependent on any regulatory modifications, especially given that the government of Estonia is likely to increase the complexity of its regulations through its most recent bill on the issuance of digital assets and currency licenses for businesses managing the sale and purchases of such digital assets and those who offer electronic wallet services.    

These regulations include new metrics used by the Financial Intelligence Unit to evaluate investor suitability, ensuring that detailed background checks are done on the company’s owners and directors.  Other regulations include new stipulations about a business’ registered address having to be within the country, as well as its board members being based primarily in Estonia as well.  In addition, the increase in application fees from 345 EUR to 3,300 EUR for this license as well as issue dates being stretched out longer due to complex verification processes results in this license application process being a more tedious and costly one, especially for newer businesses.

For those who have already obtained a cryptocurrency license for their business activities, these firms are mandated to continue acting in accordance with governmental regulations, even newer additions like the ones outlined above.  These firms may also be required to submit additional information to the Financial Intelligence Unit. 

As such, until the license is given to the respective companies, it will not be permitted to begin any of its activities, especially those related to the exchange and sales of cryptocurrency and similar digital assets.

Conclusion

Navigating the country of Estonia’s complex business climate and legal environment as an entrepreneur looking to set up a cryptocurrency company might be a challenging process – a hassle to say the least.   However, with the benefits of heightened privacy safeguards and more securitised processes, alongside various tax and accounting benefits, it is no surprise that many businesses and international actors continue seeking to apply for Estonia cryptocurrency license.  As such, Tetra Consultants hopes that this article has provided you a much better understanding about the benefits of engaging in cryptocurrency related business, and how you can acquire Estonia cryptocurrency license as well so that you can truly decide on whether you should do so yourself.

So, what are you waiting for? Contact us to find out more about the process of starting a business in Estonia, and our dedicated and experienced team will respond within the next 24 hours.  Tetra Consultants will not only empower you by helping to navigate the different regulations of Estonia, but also aid in facilitating the registration of your company there while providing invaluable, nuanced insights into any potential challenges.

Tetra Consultants

Tetra Consultants is the consulting firm that works as your advisor and trusted partner in your business expansion. We tell our clients what they need to know, instead of what they want to hear. Most importantly, we are known for being a one-stop solution for our valued clients. Contact us now at enquiry@tetraconsultants.com for a non-obligatory free consultation. Our team of experts will be in touch with you within the next 24 hours.

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