Crypto License in Estonia
Today, Estonia ranks among the top European countries in terms of the number of cryptocurrency licenses issued.
The National Financial Intelligence Unit (Rahapesu Andmebüroo or RAB) is the regulator responsible for cryptocurrency licensing in Estonia. For transactions that have now been merged into a single license for virtual currency service providers.
The Prevention of Money Laundering and Financing of Terrorism Act requires a license called a cryptocurrency license. This category includes two different services: virtual currency wallet service providers and virtual currency exchangers. Previously (as of March 10, 2020) there were two different licenses in Estonia:
Estonian Cryptocurrency License
General Provisions
Cryptocurrency wallets are offline and online methods that rely on public key cryptographic licenses to allow users to securely upload and obtain cryptocurrencies over the internet.
It can be: cold (offline – for example, hardware wallets, cryptocurrency paper wallets) and hot (online) storage. They differ in that the first keeps the digital currency offline, instead of using an internet connection. Hot wallets are suitable for small-scale storage or daily use. Hot storage wallets include regular wallets for cryptocurrencies and multi-currency wallets.
Estonia’s crypto license allows the provision of cryptocurrency wallet services, both hot and cold.
Estonia’s cryptocurrency license also allows for the exchange of crypto for fiat currency and crypto for crypto.
Licensing Process
An application for a cryptocurrency license in Estonia can be submitted by a person on the company's board of directors. If you have an e-residency card when you go to a notary in Tallinn, you should submit the license application via the Internet. The fee for applying for a license is 10,000 euros. This fee must be paid by the Estonian Ministry of Finance. The Money Laundering Data Office (an independent unit within the Police and Border Police) decides whether to issue a license within 60 working days of the application. Cryptocurrency licenses are granted indefinitely.
To obtain a license, you must provide the following information:
Business contact information (phone number, email and mailing address), resume.
The location from which the service is provided, including the website address.
The name and details of the person making the proposal.
Name, personal code (if this is not possible, date of birth), place of birth and residential address of the true beneficial owner of the company.
The procedural rules and internal control rules stipulated in Articles 29 and 30 of the Law on the Prevention of Money Laundering and Terrorist Financing, as well as the procedural rules for persons with specific responsibilities listed in Article 6 of the International Sanctions Law, procedures, Part 6 Section 13 of the International Sanctions Law and supervision of its implementation.
Name, personal code (if date of birth is not available), place of birth, country of residence, position and details of the contact person referred to in Article 29, paragraph 3 or 4 of the Law on the Prevention of Money Laundering and Financing of Terrorism.
The name, personal code (if no date of birth is available), place of birth, nationality, residential address, position and details of any person to whom the Employer is subject to international financial sanctions pursuant to clause 13.9.
If the entrepreneur, board member, trustee, actual beneficiary or owner is a foreign citizen, if the businessman is a foreigner, a certificate from the penal register of the country of origin or other similar document, a decision by the judicial or administrative authority declaring that crimes against public power are not punishable; Money laundering crime or other intentional criminal act committed within three months from the date of issuance; Approved by a notary public or other equivalent body and legalized or signed by a new legalization certificate (Apostille), unless otherwise stipulated in the contract.
Estonia
 capital |  population |  currency |  GDP |
| Tallinn | 1,357,739 | EUR | $29,344 |
Changes in Estonian legislation from March 15, 2022 (new requirements for cryptocurrency companies)
Shares in Virtual Foreign Exchange Service Providers
A virtual currency service provider must have the following legal capital:
If a virtual currency service provider provides virtual currency exchange services (services whereby people can exchange virtual currency for money and vice versa), at least EUR 100,000.
Providing virtual currency transfer services (services where you can transfer virtual currency electronically, at least partially, to a virtual currency wallet or recipient account on behalf of the originator) requires a minimum of 250,000 euros from the virtual currency service provider.
In order to establish a virtual provider of foreign exchange services, the company's authorized capital must be paid in currency.
Prerequisites for customer identification and verification
For identification and verification, service providers shall use technologies that provide real identification and prevent the transmission data from being altered or misused.
The natural person or legal representative of a legal person referred to in the first and second paragraphs of Article 31 of the Anti-Money Laundering and Counter-Terrorist Financing Law shall use a digital identity document or other form of electronic identity document approved by the Identity Card Law to identify and verify their identity. Pursuant to Article 9 of Regulation (EC) No 910/2014 of the European Parliament and of the Council on trust services required for electronic identification and electronic transactions, repealing Directive 1999/93/EC (OJ L 257, 28 August 2014, pp. 73-114), contained in the list published in the Official Journal of the European Union), an information technology tool is also required, equipped with a working camera, a microphone and adequate hardware and software for digital identification and an Internet connection.
Service providers can use information technology tools to compare biometric data to identify and verify identities.
Virtual currency service providers engaged in exchange and transfer transactions shall verify the identity of each customer in accordance with the provisions of Articles 21 and 22 of this Law, and collect at least the following information about the entities involved in the exchange and transfer transactions.
For a natural person, the person’s name and gender, a unique transaction identifier, the identification number of the payment account or virtual currency wallet, the name and identification number of an identity document, and the place of birth, date and address of the person’s residence;
Virtual currency providers collect unique identifying data about virtual currency or transfer recipients when facilitating virtual currency exchange and transfer transactions. If payment account data or virtual currency wallet identifiers are used in a transaction, the virtual currency provider will also collect data about payment account identifiers and virtual currency wallet identifiers.
Virtual Currency Provider Action Plan
Virtual currency providers are required to submit a business plan covering at least two years.
Must have funds from a cryptocurrency provider
A virtual currency provider must at all times maintain funds equal to one of the following:
Authorized capital
According to the calculation method, the own funds are calculated as follows:
If a virtual currency provider provides services specified in Sections 101 and 102 of Part III of this Law, its own funds shall be at least equal to the sum of the following:
The total value of transactions for the provision of services exceeds or is equal to EUR 5 million;
The transaction value of services exceeds EUR 5 million but does not exceed EUR 10 million;
The business carried out in connection with the provision of services exceeds EUR 10 million but does not exceed EUR 100 million;
0.5% of the transaction value of the services provided if the transaction value exceeds EUR 100 million but does not exceed EUR 250 million;
This represents 0.25% of the more than €250 million of transactions conducted within the service.
For the purposes of Section 6 of this Article, the share of transactions defined as services shall be calculated as 1/12 of the total volume of transactions defined as services in Sections 100 and 101 of this Article. If a venture capital company has been in operation for less than 12 months in the previous year, the amount of remittances and foreign exchange transactions in the previous year shall be divided by the number of months in the previous year.
It is vital for Virtual FX providers to take steps to ensure that their own funds are always accurately accounted for.
Under this Act and any law promulgated thereunder, the Financial Intelligence Unit may establish a time limit within which a virtual foreign exchange service provider must comply with the requirements imposed by the Act.
Audits of cryptocurrency providers
Virtual Forex service providers are required to have their annual reports audited. The license application should specify the auditor data.
Important information and requirements for venue, location, board members and contacts
Applicants must have at least two years of professional experience as a member of the board of directors of a virtual currency service provider and higher education.
Members of the board of directors of a virtual foreign exchange service provider may not serve on the boards of more than two such services.
The fee for applying for a cryptocurrency license has increased from €3,300 to €10,000.
In addition, lawyers from provide legal support to cryptocurrency projects and help adapt to MICA regulations.
Estonia’s Crypto Frontier: Unlocking Opportunities with Crypto Exchange License by 2024
Known for its digital governance and pioneering approach to technology, Estonia is at the forefront of cryptocurrency regulation. This guide explores the complexities of obtaining a cryptocurrency exchange license in Estonia, providing potential investors and entrepreneurs with a clear path to participate in Estonia's thriving cryptocurrency market.
Estonia’s cryptocurrency regulatory environment
Estonia’s approach to cryptocurrency regulation is characterized by its comprehensive and inclusive policy, which is managed by the Financial Intelligence Unit (FIU). The country was one of the first to establish a clear legal framework for cryptocurrencies, offering several types of cryptocurrency licenses, including:
Cryptocurrency exchange license in Estonia: enables businesses to provide exchange services between cryptocurrencies and fiat currencies.
Cryptocurrency broker license in Estonia: Allows companies to act as intermediaries in cryptocurrency transactions.
Estonia’s cryptocurrency exchange license: specifically for entities engaged in digital asset trading.
Estonia's VASP Crypto License: For service providers related to virtual assets.
Applying for a Cryptocurrency License in Estonia
The application process requires full preparation and compliance with regulatory standards, including strong anti-money laundering (AML) measures and counter-terrorist financing (CTF) protocols. Businesses must demonstrate a clear operational structure and financial stability.
Financial impact of licensing
The cost of a cryptocurrency exchange license in Estonia is considered competitive within the EU, making it a financially viable option for many startups and established companies. Planning for these costs is critical for a successful application and ongoing operations.
Advantages of Holding an Estonian Cryptocurrency License
Obtaining a cryptocurrency license in Estonia offers significant advantages, such as enhanced credibility, access to the wider European market, and compliance with international financial regulations. This strategic positioning can greatly help businesses expand and enter global markets.
Opportunities for growth and expansion
Relatively low barriers to entry and Estonia’s cheapest cryptocurrency license provide fertile ground for startups. Estonia’s supportive ecosystem offers plenty of growth opportunities, particularly in the technology and financial services sectors.
Purchase an existing license
For those looking to speed up their entry into the market, obtaining an existing Estonian cryptocurrency exchange license for sale may be a practical option. However, it is essential to conduct thorough due diligence to ensure that the license meets all current regulatory requirements.
Conclusion: As the digital and regulatory landscape continues to evolve, Estonia remains a beacon for crypto entrepreneurs around the world. Obtaining a cryptocurrency exchange license in Estonia will not only facilitate legal, secure operations, but also position businesses to capitalize on the digital financial revolution. Ensuring compliance and keeping up with regulatory changes are key to taking advantage of Estonia’s dynamic market environment.
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Does Estonia grant licenses for cryptocurrency activities?
Until recently, companies dealing with financial operations related to cryptocurrencies in Estonia could apply for two types of crypto licenses:
Cryptocurrency exchange license
Crypto wallet license
Under recent changes, however, these two license types have been merged into one, officially known as the Virtual Currency Service Provider License. It allows cryptocurrency companies to provide cryptocurrency exchange services (exchanging one cryptocurrency for another, fiat currency for cryptocurrency and vice versa) and cryptocurrency wallet services (enabling users to send and receive cryptocurrencies as a means of payment and transactions). -
How to get a cryptocurrency license in Estonia?
The first step of the process requires the establishment of a company in Estonia. Once this process is completed, the applicant will need to provide the following information:
Company information: phone, email, website address
Personal information responsible for managing and providing cryptocurrency-related services
Information of shareholders and legal representatives of the company: name, date and place of birth, contact details
Internal strategy for implementing regulations when dealing with cryptocurrencies and personal information responsible for complying with regulatory networks
Reports proving the clean criminal background of shareholders and board members
The entire application process can be completed in person or completely remotely with the help of a legal representative. -
Is it necessary to contact local tax authorities on behalf of Estonian companies conducting crypto activities?
Yes. However, the Estonian tax system has two major benefits:
Retained profits are tax-free. This means that profits reinvested in the business are tax-free.
The tax system is territorial, which means that all income from foreign sources is tax-free. -
What activities are covered by Estonia’s cryptocurrency licenses?
A Virtual Currency Service Provider License allows the licensee to provide the following services:
Issuing and hosting electronic wallets
Providing fee-based cryptocurrency exchange services
Establishing and operating crypto payment systems
Providing alternative payment systems
Wholesale procurement of precious metals and gemstones and related items -
How long does it take to get a license?
The average time it takes to complete an application and receive a final decision from the regulator is approximately 13 weeks. This time may be longer if documents are missing from the application or if the regulator requires an on-site meeting with the applicant. -
Can non-Estonian residents own a cryptocurrency company?
Yes. However, in order to complete the preliminary steps of setting up a company in Estonia, the founders must register an Estonian address as their official place of business. -
Can a non-Estonian resident be a board member of an Estonian cryptocurrency company?
爱沙尼亚加密货币公司的董事会成员最少人数为 1 人。董事会中必须至少有一名爱沙尼亚居民，并且董事会必须位于爱沙尼亚。 然而，没有法律要求爱沙尼亚加密货币公司的所有成员都必须是爱沙尼亚居民——只要董事会成员超过一人。 -
Do I need to have a bank account to get a license?
Yes. This is a necessary preparatory step to obtain a license. -
What is the minimum authorized capital of a virtual currency service provider?
To conduct cryptocurrency business, Estonian cryptocurrency companies must provide authorized capital of 100,000 euros. This amount must be deposited in the official bank account of the cryptocurrency company in question. -
How long is a cryptocurrency license issued for?
Estonia’s cryptocurrency licenses are issued for an indefinite period of time. -
Can I deposit authorized capital in cryptocurrencies?
No, this option is not currently available. -
How to pay the registered capital of a cryptocurrency company?
Payment of share capital is made by statutory contribution (cash or bank transfer). -
Why should you get a cryptocurrency license in Estonia?
There are several good reasons to get a cryptocurrency license in Estonia. First, Estonia is one of the pioneers in blockchain technology. It was one of the first EU countries to get on the crypto train and offer official crypto licenses. In addition, Estonia offers a simple licensing environment where a wide range of crypto-related services can be obtained with just one license. It is easy to apply remotely, and the licensing process itself takes a relatively short time. -
Are Estonian Crypto Companies Audited?
Yes. The regulator can visit the physical offices of Estonian cryptocurrency companies at any time. The regulator can check documents to confirm the company's activities and request further reports or documents if doubts arise. -
Can directors of cryptocurrency companies be non-Estonian residents?
Directors of Estonian cryptocurrency companies can only be individuals. The minimum number of directors is 1. If there are more than one director, half of them must be residents of EEA (European Economic Area) countries. If more than half of the directors reside outside of Estonia, the company must provide the Commercial Registry with a contact person in Estonia so that the necessary documents can be sent. All foreign directors will be required to provide their residential address and email address. -
What measures has Estonia taken to prevent money laundering and the financing of terrorism?
These measures are set out in the Anti-Money Laundering and Terrorist Financing Prevention Act. It was first introduced in 2017 and amended in 2020 – this time to cover virtual asset service providers as well. In 2022, the Estonian government approved a new package of changes affecting Estonian cryptocurrency companies. Officially, they are treated similarly to other financial institutions in Estonia. Here are the main AML requirements that Estonian cryptocurrency companies currently face:
Revise internal AML procedures
Appoint a compliance officer
Conduct a “suitability test” (which is the responsibility of the manager)
Set up an office in Estonia
Set up a payment account with an institution registered in Estonia or the EU -
What difficulties might you encounter in obtaining a cryptocurrency license in Estonia?
Cryptocurrency companies in Estonia are witnessing an era of change. Regulation is becoming increasingly strict, which in practice has led to the revocation of licenses for a large number of providers that no longer meet the new requirements. To successfully establish and operate a cryptocurrency company in Estonia, it is necessary to carefully follow all requirements and upcoming changes, demonstrate a flexible attitude and the ability to adapt to regulatory changes. -
Where can I open a bank account for an Estonian cryptocurrency company?
According to local regulations, cryptocurrency companies in Estonia are not required to have a bank account with a traditional banking institution. Alternatively, cryptocurrency companies can work with European fintech companies that offer accounts with IBANs. Having an IBAN is required to establish a cryptocurrency company in Estonia.