Estonia is one of the world’s most digital enabled countries, having developed a very advanced economy propelled with developments in the digital and technological frontiers. The country adopts a cashless society, with 99% of financial transactions happening digitally. The Estonians have managed to develop a high-level financial sector from scratch, paving the way for the uprising of Financial Technology (FinTech) which provides prompt and revolutionary financial solutions to other nations. Given its high level of achievement in the realm of FinTech and digital space, it should come as no surprise as Estonia is one of the earliest adopters of blockchain technology alongside other countries like Malta and Gibraltar. With the IT jurisdiction open to blockchain technology and digital related assets, it has become a popular choice to register a cryptocurrency company in Estonia. Before you apply for the Estonia cryptocurrency license, come find out what you need to know with Tetra Consultants as we share the ultimate guide on how to register a cryptocurrency company in Estonia.
1) What is the Virtual Currency Service Provider License:
The first thing to know on how to register a cryptocurrency company in Estonia is to understand what permits and licenses are required for your business. In general when setting up a cryptocurrency company, there are mainly two types of businesses. An interested investor in the cryptocurrency landscape can either choose to register a cryptocurrency wallet (which includes generation and storage of encrypted keys) or a cryptocurrency exchange (services which includes exchanging fiat currency for cryptocurrency or vice versa, and exchange of cryptocurrency for other forms of cryptocurrency). In the past, each distinct type of company had to apply for their respective wallet or exchange license but it has now streamlined and merged into a single license known as the Virtual Currency Service Provider License. Under a Virtual Currency Service Provider License, an Estonian company is only then allowed to operate in the following crypto-businesses:
1) Generate private keys/wallet
2) Custodial services for private keys
3) Crypto-exchange services
4) Initial Coin Offerings (ICOs, same concept as IPOs of stocks)
The Virtual Currency Service Provider License is granted by the authority of Estonian’s Ministry of Finance and compliance to the regulations is under the purview of the Financial Intelligence Unit (FIU). Cryptocurrency companies have to adhere to laws on Anti-Money Laundering and Counter-Terorrism Financing (AML/CTF) as part of their compliance program.
2) Requirements for the Virtual Currency Service Provider License:
The second thing to know on how to register a cryptocurrency company in Estonia is about the requirements and criterias to meet before a successful application for the Virtual Currency Service Provider License. To qualify for the Virtual Currency Service Provider License, the minimum share capital required of the crypt-currency company is EUR12,000 and has to be fully paid upfront. There must be economic substance in Estonia, meaning most of the core-income generating activities and business meetings must be happening in Estonia. A physical registered office address, local management team as well as an identified compliance officer from the managerial positions must be present. Alongside the compliance officer, there must be a local AML/CFT officer identified as well.
Amongst the directorship of the cryptocurrency firm, there must be a local resident or Estonian citizen and all members of the company must have non-criminal records. Cryptocurrencies are encouraged to form corporate bank accounts either with an Electronic Money Institution or other reputable corporate banks.
3) Application Process:
The third thing to know on how to register a cryptocurrency company in Estonia is the application process. The application for the Virtual Currency Service Provider has to be filed by a Board Member of the company. It can be submitted via online means using an e-residency card or issue a power of attorney to represent your company and enable Tetra Consultants to apply on your behalf. The following information and data are required for a successful review of your application:
1) Contact details of the primary business owner
2) Address of the provision of cryptocurrency services
3) Name and identification codes (where applicable), place of birth and residence address of real beneficiary of the company, compliance and AML/CTF officers.
4) Compliance program and any rules and regulations developed such that it is in accordance to the Money Laundering and Terrorist Financing Prevention Act
4) Benefits of Virtual Currency Service Provider License :
The final thing to know about a cryptocurrency company in Estonia is the benefits that the Virtual Currency Service Provider License entails. The cryptocurrency environment in Estonia is well regulated, allowing cryptocurrency exchange license holders to operate in a safe environment given the strict reporting and KYC checks. This also creates trust as a by-product for interested consumers of the cryptocurrency services. Not to mention, since Estonia is part of the European Union (EU) membershipship, you will not be required to apply for an additional cryptocurrency license if you are operating in other functions of the EU, providing greater access.
Engage Tetra Consultants to find out more on how to register a cryptocurrency company in Estonia in a smooth and hassle-free process. The team provides a comprehensive service package that includes planning and strategizing with our clients to select a suitable business entity, completing the registration and documentation processes, obtaining