Obtaining a cryptocurrency license in Estonia

Estonia is one of the first to legalize a business related to the circulation of cryptocurrency. In 2017, this state was one of the first in the world to introduce regulation of the cryptocurrency market.^[1] . At the end of 2018, a report was published, according to which about 1000 licenses were issued to companies engaged in the conversion of cryptocurrencies and servicing electronic wallets over the year. And every year the number of licenses issued is growing, as the interest in this jurisdiction is increasing due to its favorable climate for entrepreneurial activity in this area.  

In this article, we will raise the question of how to build a business competently from a legal point of view by opening a cryptocurrency exchange. In order to start a successful cryptocurrency exchange business in Estonia, an entrepreneur needs to obtain a virtual currency exchange license. The license of the Estonian cryptocurrency exchange applies to operations with cryptocurrency assets that can be converted into fiat currency, that is, into ordinary funds - dollar, euro, ruble, etc. With this license, you can create cryptocurrency wallets and provide services for exchanging cryptocurrency for another cryptocurrency, fiat to cryptocurrency and vice versa.  

So, in Estonia at the moment there is one type of licenses for cryptocurrency companies. This is an exchange license (Virtual currency service), which replaced the previously existing 4 licenses. 

The process of obtaining licenses requires serious preparation, so certain details must be taken into account when filling out an application for a license and when collecting a package of documents. Therefore, the first step is to contact professional lawyers, prepare and notarize a power of attorney for one of them for the convenience of carrying out all the necessary actions (then the power of attorney must be translated into Estonian and certified by a notary in Estonia). The next step is to register a company in Estonia. Registration is carried out by the Estonian Center of Registers and Information Systems (RIK). Having chosen a company name, it is necessary to check its relevance and availability, that is, to understand if a company with such a name already exists.

Accounting is maintained according to the rules provided for ordinary companies. Therefore, it is necessary to obtain another individual number by submitting an application to the tax department of the Northern Tax and Customs Center. At the moment, documents cannot be sent by regular mail or e-mail, they must be submitted manually. This can be done by a lawyer who has a POA (power of attorney) authorized by you to perform these actions. Subject to the submission of all the necessary documents, the registration process usually takes about 5 working days.  

Please note that the authorized capital for obtaining a license must be 12,000 euros, which must be paid in full.

An application for a license in Estonia is processed by the Financial Intelligence Unit - the Estonian Financial Intelligence Unit, which is an independent structural unit of the Estonian Police and Border Guard Board^[2] . After the submission of the package of documents specified below, the FIU reviews the documents within 30-90 days following the filing date. The authority always has the right to request additional information, therefore it is recommended to provide the most detailed description of the business in the application.

What you need to provide FIU to obtain a cryptocurrency license in Estonia:

1. Confirmation of the absence of convictions of the founders of the company and members of the board. 
2. Lease agreement for the actual office in Estonia.
3. The presence of a responsible person in the structure of the company of an Estonian resident.
4. The presence of an AML officer of an Estonian resident. 
5. Confirmation of opening a bank account or EU payment system.
6. AML policy is in accordance with the AML 5 EU Directive.
7. Confirmation of payment of the authorized capital.

Thus, the process of opening a cryptocurrency exchange in Estonia is divided into two stages. The first is the registration of the company itself with the Estonian tax authorities and entering information about the company in the Unified Register. And the second stage is aimed at correctly filling out the application and obtaining a license to legally carry out a business in the field of cryptocurrency exchange.

Our team of A4 Law Firm lawyers is ready to provide all the necessary persons to obtain a license, as well as accompany the entire process from the moment of company registration to obtaining a license.