Companies in Estonia are required to comply with the Money Laundering and Terrorism Funding Prevention Act, which was updated on March 15, 2022 (Money laundering prevention and application of financial penalties rules and laws in Estonia and the European Union | FSA). The new regulations are meant to mitigate the dangers of money fraud and terrorism funding during bitcoin trades within Estonian businesses. To this end, new requirements are being introduced for virtual asset service providers (VASPs). Licensed VASPs and new applicants alike will need to adjust their practices and documentation to comply with these changes by 15.06.2022.
If you need help applying for a crypto exchange license in Estonia, Fintech Harbor Consulting would be delighted to help you.
REQUIREMENT FOR A SINGLE CRYPTOCURRENCY LICENSE IN ESTONIA
It is widely agreed that Estonia’s IT jurisdiction is the most lenient of its kind, providing cryptocurrency exchange license applicants with favorable terms under which to do business. A crypto-license is a government authorization to operate a supervised cryptocurrency venture. Since the local order presumes a faster process of getting a crypto-license than, for example, in the territories of other countries, many of the new coin and trading sites are registered in Estonia. You can count on Fintech Harbor Consulting to have your back as you prepare the paperwork and seek out the appropriate authorization from the appropriate authorities in order to launch your cryptocurrency business.
It is the responsibility of the National Financial Intelligence Unit (FIU, or Rahapesu Andmebüroo, RAB) of the Estonian government to issue crypto-licenses. According to the Law on the Prohibition of Money Fraud and the Funding of Terrorism, a license known as a singular coin license is needed for operations in the area of crypto services. This area has two kinds of firms: those that facilitate the storage and exchange of digital currencies in the form of wallets and exchanges. Two separate permits are now rolled into one called the Virtual Currency Service Operator License.
- Access to a secure cryptocurrency wallet or custodial service
In the first group, we have services like key generation and safekeeping.
- Crypto-exchange
The second class of businesses facilitates the trading of one cryptocurrency for another, or for a fiat currency.
In addition to obtaining a license, Fintech Harbor Consulting can help with Hong Kong company formation.
WHY YOU SHOULD GET A CRYPTOCURRENCY LICENSE IN ESTONIA
One or more of the following factors makes Estonia an irrefutably advantageous base for operating a crypto business throughout Europe.
First, a crypto business based in Estonia can gain from transparent and effective oversight. The rules laid out by the Estonian AML Act and its ancillary sections make it possible for a registered business to understand its legal obligations and take the necessary steps to ensure that it is always in accordance with the law.
Furthermore, Estonia offers a welcoming business climate. The e-Residency program makes it possible to set up and manage a company in Estonia entirely online, from anywhere in the world. New information shows that e-Residents of Estonia from all over the world bring in over 1 billion Euros annually through their Estonian businesses.
Further, Estonia does not levy any sort of business tax. As a result, only the portion of net profits that are distributed to shareholders (the “distributable portion”) is subject to the corporate income tax of 20%. Simply put, the Estonian tax system allows businesses to spend their earnings without incurring any additional tax liability.