Cryptocurrency licences in Estonia

Virtual currency service provider licence
Persons that offer virtual currency services can apply for one licence which has two subcategories:
  • service of exchange a virtual currency against a fiat or another virtual or crypto currency;
  • service of a virtual currency wallet service. It is a service in the framework of which keys are generated for customers or customers' encrypted keys are kept, which can be used for the purpose of keeping, storing and transferring virtual currencies.
New rules from 10 March, 2020
  • Crypto-companies have to follow the same requirements as financial institutions;
  • Share capital minimum is 12 000 euro;
  • Physical presence in Estonia (the registered address and the place of business);
  • Management board in Estonia:
management board member(s) and compliance officer must hold Estonian residency and a compliance officer must prove impeccable business reputation, i.e. provide supporting documents regarding education, skills and reputation. Management board member must have good business reputation;
  • Criminal records of all related persons/companies from all countries of citizenship/incorporation;
  • Passport copies of all related persons from all countries of citizenship;
  • Existing bank account / PSP account in an EEA country which is providing cross-border services in Estonia or which provider has established a branch in Estonia;
  • The list of payment accounts kept in the name of the company, along with each payment account's unique number and the account manager's name;
  • Updated KYC/AML procedure rules;
  • State fee for issuing a license is 3.300 euro.
Summary on licensing procedure
  • During the process FIU (Financial Intelligence Unit - the license issuing authority and the regulator) has the right to request additional information and explanations about the planned activity. Licence will be issued after all required information is considered sufficient and all of the conditions are fulfilled;
  • Any change after obtaining the license (address, owners, directors, UBOs, compliance officers etc.) requires registering amendments at FIU with full documents set;
  • Revocation of licence. In addition to the grounds provided for in the General Part of the Economic Activities Code Act, FIU shall revoke licence where:
    • entity repeatedly fails to follow the precepts of FIU;
    • entity has not commenced operation in the requested field of activity within six months from the issue of the licence.
    License obtaining process
    To apply for the above mentioned cryptolicenсe, it must be done via a company registered in Estonia or through a registered branch office of a foreign company in Estonia.

    We help with registering a company and drafting the document set required for the license with submission to FIU.

    During the licence application process we assist in communication with FIU as it often has additional questions or demands clarifications.

    In case of a foreign corporate shareholder, FIU requires the criminal record of the foreign company and every related person of that legal entity. FIU also requires to provide the foreign registry extract with the list of UBOs of the relevant entity. Thus, using a foreign company in the Estonian company makes the licensing process more complicated.

    FIU can invite the contact person (i.e. AML compliance officer) for a face to face meeting before granting the licence. The goal is to confirm that the person in charge is familiar with the AML rules of procedure, relevant Estonian laws and obligations to notify FIU in case of money laundering or terrorism financing suspicion. In case the AML compliance officer is not in the structure of the Estonian company (in the board or shareholding), FIU wants to see employment relation.
    Timeframe
    Company registration
    Once we have obtained all the required information and documents from you, it takes usually about 1-2 days to create the company. In case you want to start a company remotely (without visiting Estonia), it regularly takes 2-3 weeks more time.

    Registration for virtual currency license
    After the company is registered and we have received from you all the required information and the documents, we draft the documents set and apply for the licence.

    The process of an application
    An application for licence shall be processed by FIU within 60 working days as of the date of submission of the application.
    Bank account opening for cryptocurrency companies
    There are several options for accounts opening. The KYC due diligence process related to cryptocurrency companies is more demanding. Currently, as a rule, Estonian banks do not open accounts for cryptocurrency companies. Many of our clients are successfully opened accounts for cryptocurrency companies in EEA e-money and PSP institutions.
    Taxation of cryptocurrency transactions in Estonia
    Payments for goods and services made in virtual currencies are generally allowed. For accounting purposes the transaction must have the value in EUR and regular VAT general rules apply. VAT returns must be submitted in EUR and VAT will be paid/returned in EUR.