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Chinese Crypto Licensing - Estonia
About Estonia
Estonia is regarded as a cryptocurrency-friendly country, with a favourable regulatory climate for cryptocurrencies and blockchain technology. Investing in Estonia might be appealing for a variety of reasons, but as with any investment, comprehensive research and consideration of many considerations are required before making a decision.
The country of Estonia is situated on the Great Northern European Plain. Estonia is the most northern of the three Baltic countries. Tallinn, the capital, is located about 80 kilometres south of Helsinki, Finland, across the Gulf of Finland. The Baltic Sea is to the west of Estonia, and Russia is to the east. Estonia shares a southern border with Latvia. Estonia is the smallest of the Baltic states, covering 17,462 square miles (45,226 square kilometres).
According to Worldometer’s elaboration of the most recent United Nations data, the current population of Estonia is 1,329,071 as of Wednesday, May 10, 2023.
Estonian is the official language of Estonia, and it is spoken natively.
Estonia is part of Continental European legal system. Sources of law are legal instruments such as the Constitution, European Union law, international agreements, Acts and Regulations.
Here are some of the benefits of having a crypto licence in Estonia:
1. Clarity in regulatory terms
Estonia has developed clear legislation and norms for cryptocurrency-related activity, giving enterprises working in the crypto area legal certainty and clarity. The country passed the Money Laundering and Terrorist Financing Prevention Act, which specifies the duties and obligations for bitcoin exchanges and wallet providers.
2. Online residency programme
Estonia has an e-residency programme that allows overseas entrepreneurs to set up and run their enterprises online. With an e-residency, you may apply for a crypto licence from anywhere in the globe and run your crypto-related business from anywhere.
3. Membership in the European Union (EU)
Estonia is a member of the European Union, which allows it to trade on the European market. Having a crypto licence in Estonia enables you to operate inside the EU’s regulatory framework and provide your services to customers throughout the EU.
4. Reputation to be trusted
Estonia is well-known for its cutting-edge digital infrastructure and dedication to e-government. It has a good reputation for creativity and has attracted a large number of technology startups and businesses. Having an Estonian crypto licence can boost your credibility and reputation in the sector.
5. Passporting of financial services
Estonia’s crypto licences have the potential to provide financial services passporting within the EU. This means that if you receive a licence in Estonia, you may be allowed to provide crypto-related services in other EU member states without having to obtain extra licences.
6. Tax environment that is favourable
Estonia has created a one-of-a-kind tax structure known as e-Residency 2.0, which offers benefits to enterprises, including cryptocurrency companies. With a corporation tax rate of 20% on distributed profits, the system makes tax compliance simple and efficient. Furthermore, there is no capital gains tax on retained and reinvested profits in Estonia.
7. Banking services are available.
Obtaining a cryptocurrency licence in Estonia may aid in the development of ties with local banks that are more likely to cooperate with licenced cryptocurrency enterprises. This can make fiat currency operations easier, such as receiving deposits and transferring funds.
General
| License: | Licence Virtual Currency Service Provider License |
|---|---|
| Timeframe for Approval: | 4 months |
| Regulator: | National Financial Intelligence Unit |
Company Structure
| Local Director: | At least one director (must be an Estonian citizen and resident) |
|---|---|
| Local Shareholder: | 1 shareholder (natural person or legal entity) |
| Local Registered Office: | Required |
| Local Staff: | Required |
| Compliance Officer: | Required |
| AML/KYC: | Required |
| Audit: | Required |
| Economic Substance: | Required |
| Corporate Tax Rate: | 20% |
| Currency: | EUR |
| Minimum Paid-up Capital: | EUR 2,500.00 |
| Capital Requirement: | EUR 13,000 |
| Gov. App Fee: | EUR 3,300 |
In Estonia, obtaining a crypto licence entails a number of stages. Here’s a rundown of the general procedure:
1. Formation of a company
The first step is to incorporate a company in Estonia. This is possible through the e-residency programme, which allows you to establish a firm online. You must select a legal entity type, such as a private limited company (OÜ), and supply all required papers.
2. Fulfilling requirements
Check that your organisation fits the Estonian Financial Intelligence Unit’s (FIU) standards for a crypto licence. This includes establishing a registered office in Estonia, appointing a local contact person, and implementing necessary anti-money laundering and terrorist funding safeguards.
3. Gather all of the necessary paperwork for the licence application. This usually includes:
3.1 Form of application: Fill out the FIU’s application form, providing information about your company, shareholders, directors, and the nature of your cryptocurrency-related operations.
3.2 Business plan: Create a comprehensive business plan outlining your company’s activities, target market, marketing approach, and financial projections.
3.3 Anti-money laundering (AML) procedures: Create and document comprehensive anti-money laundering (AML) procedures and know-your-customer (KYC) processes that adhere to Estonian regulations.
3.4 Compliance documentation: Create rules and processes for risk assessment, customer due diligence, transaction monitoring, and suspicious activity reporting.
3.5 Financial statements: Include balance sheets, profit and loss statements, and cash flow statements in your financial statements.
4. Submit your application.
Submit the completed application and supporting documentation to the Estonian FIU, together with the applicable application cost, which may vary depending on the type of licence you are seeking.
5. Examining and evaluating
The FIU will analyse your application and conduct a thorough evaluation of your organisation and the material presented. During the review process, they may seek additional information or explanations.
6. Background investigations
The FIU will conduct background checks on the company’s directors and stockholders as part of the appraisal process. This involves evaluating their reputations, ethics, and professional credentials.
7. Decision and publication
The FIU will make a decision on your application once the assessment is completed. If you are authorised, you will be given a crypto licence.
8. Obligations of compliance
Following the acquisition of the licence, you must meet continuing compliance duties such as keeping accurate records, conducting frequent internal audits, and making reports to the FIU as required by Estonian regulations.
Our fees Included:
- Professional and agent fees;
- Incorporation of an Estonia company “OU”;
- Entry of the company into the commercial register;
- Preparation and adaptation of the company KYC to the relevant payments and crypto activity the company will perform (Exchange/ Custody wallet provision)
- AML and KYC officer search and training
- Submitting the application to Estonian Financial Intelligence Unit (FIU)
- Leading the client and liaising with the regulator to ensure successful license issuance
- Legalizing all of the company documents and translation into English language
- Assistance in selecting and renting an office in Estonia
- Assistance in company share capital contribution
- Opening of company bank account
- Opening the company a crypto liquidity account
Documents required by all involved individuals
(including but not limited to directors, shareholders and beneficial owners)
- Passport copy (Notarised)
- Utility Bill issued within the last 3 months (Notarised)
- CV or Resume for each involved individual
- Two professional reference letters
- Qualifications (Notarised)
For Corporate Shareholders
- Articles of Association in English
- Registered office address documents (Notarised)
- Company Register of director/s
- Company Register of UBOs (shareholder register, or incumbency certificate, or share certificates)
- Formation of international business corporation.
- Preparation and drafting of shareholder and officer agreements.
- Preparation and drafting of narrative business plan.
- Prepare five year financial projections.
- Preparation and drafting of current financial statements
- Preparation and drafting of personal financial statements for owners.
- Identification and draft letters naming principal representative and auditor.
- Draft and prepare required bank charter and prospectus
- Preparation and drafting application with regulatory authorities.
- Respond and draft responses to regulatory authority application inquiries.
- Facilitate and consummate bankcard relationship with prepaid card program managers
- Preparation and drafting of policy agreements and related documents.
- Facilitate and consummate IBAN and correspondent bank relationship
- Provide for required physical presence and local director
- Preparation and review of client agreements, website disclosures and related agreements.