The Crypto-Currency License in Estonia
If you’re an innovative, serious and future-building crypto-currency entrepreneur, the Estonian Crypto-Currency License might be the way to structure your business.
You can use two types of licenses:
1. Currency Exchange License.
Create an exchange where your clients can exchange fiat to crypto, and crypto to fiat. If you’re intending to create an entry and exit point (similar to Coinbase), where people can buy and sell cryptos with fiat, this is the license you seek.
2. Crypto-Currency Wallet Service.
The second license allows you to provide virtual wallet services: storage or transfer of virtual currency. If you wish to provide custodial services, like generating and keeping keys on behalf of your clients, option two is good for you.
To apply for the above mentioned license(s), you must have a local company, or a branch office of a foreign company registered in Estonia. As per our experience, it’s better to use a local company (less paperwork).
Application for a cryptocurrency exchange license must be submitted to the Register of Economic Activities. The applying company is required to have at least one board member, one shareholder, and must appoint a compliance officer for performance of AML/CFT duties and obligations. This person must be a qualified specialist, and have solid knowledge of the Estonian language (as they often need to communicate with the authorities).
To proceed with the application you need to submit the following documents for each shareholder and director involved. All documents must be in English and certified with an apostille. These documents may not be older than 3 months:
Recent utility bills
CV / Resume
Bank reference letter
All related persons should have a non-criminal record (shareholders, board members, beneficial owners, and responsible persons). When a company is the shareholder, it also has to provide proof of a clean record. This means that using a corporate shareholder in your structure might result in delays in the licensing process.
When applying for option 1, a Cryptocurrency Exchange License, the following is also required:
Internal control rules of the company.
Internal procedure rules of the company.
Company’s webpage address.
name and contact details of the person in charge of provision of services.
Information on the compliance officer designated for the prevention of money laundering and terrorist financing.
Information on the person who is in charge of the imposition of the international financial sanction and who has been appointed by the undertaking in accordance with Estonian legislation.
The Application Process
The licence application shall be processed by the Financial Intelligence Unit (FIU). From the date of submission we expect to hear whether the license was granted within 2-6 weeks.
During the process, the FIU has the right to request additional information, and explanations about the planned activity. The license will be issued after all required information is considered sufficient, and all of the conditions are fulfilled.
In general, the whole application process is expected to take between 6 to 10 weeks.
It is worth noting that a license can be revoked if the company has not started operations within six months of receiving it.
Does This License Allow You To Do An ICO?
This license on its own cannot be considered a license for an ICO. The Estonian authorities state the following:
“The Estonian Financial Supervisory Authority (EFSA) is of opinion that tokens in terms of the offerings mentioned above, depending on their structure, might be considered as securities according to the definition set forth in the current Securities Market Act (SMA) as well as in the Law of Obligations Act (LOA).”
At the end of the day, the collection and control of third-party funds is regulated all throughout the EU. If your business model involves issuing tokens or coins, please let us know. We’ll check the activity beforehand. If it is considered an ICO, there are a lot of other regulations that come into play, from restrictions on what you can say in your white-paper and advertisements, to Anti-Money Laundering legislation.
Make sure to check the following page, when you're doing an ICO
If you wish, we can assist you with obtaining this license. Our services include:
Preparation and submission of all application forms and accompanying letters.
Drafting the Memorandum and Articles of Association
Providing directors/ shareholders questionnaires (to be prepared with your assistance),
Provide AML/Compliance manuals and reports that you can use to submit.
All other activites to ensure a smooth issuing of the license.
Are you interested in setting up a properly licensed crypto currency business?
Then contact us now via the contact from below: