Cryptocurrency Exchange / Virtual Currency Services License in Estonia
Estonia Cryptocurrency Regulation – How Does It Work?
Virtual Currency Services Licenses in Estonia are issued by the Financial Intelligence Unit (FIU). Because cryptocurrency regulation is still in its infancy stages, the Estonia FIU has only been granting licenses for approximately 3 years, which in relative terms is quite a long track record. Currently the barriers to entry are quite low, however, we suspect they will slowly be raised in the year to come.
In 2020, the Estonia FIU consolidated license permissions into a “2 for 1” type of regulation which allows licensed exchanges to:
- Legally Provide the Exchange of Virtual Currencies to Fiat and Vice Versa
- Offer Virtual Currency Vault (Wallet) Services to Clients
Major Advantages of an Estonian Cryptocurrency & ICO License
Businesses whose focus remain in the crypto currency space are often restricted from major distribution and publicity channels, examples being Google, Apple Store, and Facebook. Due to higher standards set by these providers in relation to marketing, a cryptocurrency license is often a pre-requisite to conducting business with these mediums.
In Estonia, investors enjoy full corporate tax exemption on reinvested profits, making it a convenient location for an ICO. In fact, since the 1st of January 2018, corporate income tax on distributed profits was decreased from 20% to 14% for dividends paid to legal entities.
Due to the rapid growth in crypto currencies in a relatively short period of time, unlicensed businesses suffer from a credibility issue. A crypto currency exchange license in Estonia is an excellent way for new exchanges to separate themselves from the competition as it demonstrates both their financial acumen and seriousness.
As the financial and technology sectors slowly begin to adopt blockchain technology, regulation in Europe will only increase in complexity and cost. It’s our view that now is an excellent time to obtain a cyrptocurrency license “on the cheap.”
What Are the Requirements for a Cryptocurrency License in Estonia?
- A Detailed Business Plan
- Criminal Background Check
- Company Formation in Estonia
- A Local Board Member (Must Reside in Estonia for at Least 6 Months per Year)
- Share capital of €12,000
- AML Officer
Atomiq Consulting – Your Partner for Cryptocurrency Licenses & Regulation in Estonia
Atomiq Consulting specializes in corporate services, banking, and licenses for businesses in the crypto currency and foreign exchange sector. With decades of experience in the foreign exchange industry, we quickly realized the potential of the cryptocurrency space, an industry set to grow enormously in the years to come.
Our years of industry experience, knowledge of regulatory changes and successful track record in obtaining licenses for our clients make us an excellent partner for your cryptocurrency license. To learn more about how Estonia regulates ICOs and cryptocurrenices, don’t hesitate to contact us today!
Estonia Cyptocurrency License FAQ
The Estonia FIU used to offer 2 types of licenses, what happened?
Originally this was the case whereby 2 separate licenses were issued by the FIU:
Providing Exchange of Virtual Currencies to Fiat
Virtual Currency Vault (Wallet) Services
In the beginning of 2020, the Estonia FIU amended regulations to combine both of the above referenced licenses into a single Virtual Currency Services License, which is now the only type of license available. Furthermore, all previous license holders were immediately upgraded to this new license which combined both permissions.
Can I launch an ICO with a cryptocurrency license in Estonia?
Yes, this is possible. It’s important to bear in mind, however, that the exchange is ultimately responsible for any client complaints regarding new products.
Does the Estonia FIU allow the AML officer and local director to be the same individual?
No. This would be viewed as a conflict of interest.
Is it possible to “passport” an Estonia FIU Cryptocurrency license to other European member states?
Unlike the foreign exchange industry, which has a general passporting regime established via MiFID II, cryptocurrency regulation is still evolving from year to year. For this reason, passporting doesn’t exist at the moment in the EU as each member state has its own rules pertaining to the regulation of crypto currencies.
How does the Estonia FIU define a security?
If a coin or token offers some type of returns to the investor, then it is considered a security. Typically, the Estonia FIU does not review each product offered by the exchanges it regulates, however, if complaints are received from clients, this could result in the license being revoked or temporarily suspended.
Does the Estonia FIU allow for the €12,000 share capital to be paid in the form of a cryptocurrency?
No, the share capital must remain in fiat currency, in this case Euro, at all times.
On what grounds would an application for a cryptocurrency license in Estonia be rejected?
The Estonia FIU requires a criminal background check for all shareholders. Any applicant that fails to provide this document will be rejected. Additionally, should the FIU determine that a shareholder has criminal ties, this would be grounds to revoke the application. As a final thought, because of the difficulty in obtaining a criminal record in some parts of the United States, applications with shareholders holding American passports often face approval challenges.
How does ICO and cryptocurrency taxation in Estonia work?
Applicants are generally considered to be financial institutions, however, are not subject to any special tax reporting.
Estonia Fact Center – A Quick Overview
The Republic of Estonia is located in northern Europe and bordered by the gulf of Finland, the Baltic Sea, Latvia and Russia on the North, West, South and East respectively. It’s economic policies are characterized by openness and flexibility. Ranked 7th out of 180 countries for economic freedom on Heritage foundations’ index of Economic Freedom, 22nd of 176 by Transparency International, and 12th in doing business out of 190 countries, by the World bank. Estonia’s GDP growth was an average of 7% per annum, between 2000-2008. The country’s decline maxed at 15% in the wake of the global financial crisis, but has since recovered and more recently is growing at approximately 2% per annum.
Why Build Your Own Cryptocurrency Exchange in Estonia?
- Estonia proudly boasts of an advanced banking system, as nearly the entire population uses mobile and internet banking services
- Recognized throughout Europe for having “best tax code in the OECD”, Estonia has held first place for five successive years by Tax Foundation’s International Tax Competitiveness Index
- Only 7 banks are registered as companies in Estonia, the other players being branches of Scandinavian banks, which are subject to supervision and deposit guarantee systems of their home countries.
- The loan burden ratio of the Estonian private sector to GDP is relatively low when compared to similar countries
- Estonia has very low public debt
- Foreign investors enjoy a level playing field with local firms, unrestricted repatriation of profits & capital as well as the right to own property
Blog Posts
Fake Vs. Real Forex Licenses – How To Tell if a Forex Broker License Jurisdiction is Legitimate?
In recent months we’ve seen an increase in requests for fx broker license jurisdictions which our team believes are not […]
View More【亞洲Prop Trading熱潮】經紀商轉型新趨勢，你準備好了嗎？
亞洲Prop Trading熱潮加速來襲 近年來，亞洲地區的零售交易市場正快速成長，交易者的行為與偏好也出現顯著轉變。**Prop Trading（自營交易）**模式從歐美市場迅速擴散至亞洲，尤其在台灣、香港、新加坡、馬來西亞與菲律賓等地，Prop Firm 的吸引力正在穩步上升。 作為長期觀察亞洲經紀商發展與合規策略的顧問，我強烈建議有志拓展零售市場的券商，儘早布局自有品牌的Prop計畫。這不僅能提升品牌差異化，更能深化用戶參與與留存。 關鍵趨勢：為何亞洲經紀商該認真考慮Prop業務？ 1. 年輕交易者崛起，追求Gamified交易體驗 Z世代與千禧世代交易者不再滿足於傳統的下單平台。他們偏好有遊戲感、有挑戰性的交易環境，這讓Prop Firm中的「評估挑戰賽」、「晉級制度」與「分潤模式」高度吸引這群用戶，特別是在社群媒體與YouTube上透過KOL推廣，更是推波助瀾。 2. Prop Firm成為品牌與流量的雙引擎 傳統依賴Introducing Broker（IB）開戶導流的方式逐漸失去效力，反觀Prop模式能主動吸引有潛力的交易者報名參與比賽與培訓，大幅提高用戶質量與參與度。這些交易者一旦通過篩選，會自然成為長期交易用戶，也能成為品牌大使。 3. 合規與技術門檻下降，落地門檻更低 隨著第三方Prop技術提供商（如FTMO系統架構商）日趨成熟，以及經紀商能選擇設立於離岸持牌區域並與法律顧問合作設計合法契約架構，Prop的推動已經不再高不可攀。現在是進場的絕佳時機。 […]
View More