Cryptocurrency License Estonia - Things You Must Know Before Applying
Updated: Jan 8, 2020
Compared to the other member nations of the European Union, the cryptocurrency regulations are open and inviting in the world’s first fully digitized country, Estonia. Although cryptocurrency is no legal tender in Estonia, at the same time, not illegal trade electronic assets, instead the government recognizes it has “Value Represented in Digital Form.” To set up a cryptocurrency exchange in the country, it is a requirement to file for the crypto license Estonia to the Financial Intelligence Unit. As the 2017 notification, the cryptocurrency transactions are not subjected to VAT. However, the government has imposed certain restrictions and regulations to the crypto exchanges operative to curb illegal activities via digital currency. All the rules are framed under the Anti Money Laundering and Terrorism Finance Act.
So, there is an ocean of possibilities to start a crypto business in the country, but the lucrative and practical business type is to start a crypto exchange. However, now you might be wondering how the license mechanism in Estonia, right? Don’t worry, we are here to sort that out by providing you concise and valuable information to move ahead in your venture.
As you are planning to start a company that deals with digital currencies, you can either apply for one or both the licenses.
Cryptocurrency Exchange License
Issued by the Financial Intelligence Unit of Estonia, this license lets the company to trade virtual currencies in the country freely. This includes the exchange of fiat to crypto, crypto to fiat, and crypto to crypto.
Virtual Service Provider License
This license type allows a company to offer virtual wallet service to their customers; however, this works under a proper framework, which involves the wallet service provider generate keys or have the encrypted keys of their customers. These keys are for the purpose of pf storing and transferring the digital currency. So, in a nutshell, if you want to operate a crypto exchange that offers the facility of storage of the critical credentials required to access the electronic currency, then you need to apply for both the license at the same time.
General Information About the Crypto License Estonia
The licenses are issued by the Financial Intelligence Unit, which is a segment of the Estonian Police and Border Guard Border. If you want to obtain both the Cryptocurrency Exchange and Virtual Wallet Service license, then two different applications need to be submitted from your end. Similarly, the Financial Intelligence Unit will review the applications separately and issues two different licenses.
A company that gets the Cryptocurrency License Estonia is recognized as a financial institution in the country, but no special taxes are imposed on it. Although the company has to keep a record of the transactions, no direct reporting has to the regulator. The Financial Intelligence Unit has the power to make precepts and obtain information about the company’s activities.
If you want complete information regarding the licensing processing, then it's best to check the official website of the government.
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