More and more companies are applying for Estonian Crypto-Licenses. Let’s find out how the process works.
Estonian companies that deal with digital currencies can apply for two different activity licenses:
1. Virtual wallet operating license. This license allows providing virtual currency wallet service in the framework of which the company generates keys for Clients or keeps Clients’ encrypted keys, which can be used to keep, storing and transferring virtual currencies. This service means offering custodial services of credentials necessary to access virtual currencies.
2. Cryptocurrency exchange operating license. This license allows all kinds of exchange operations (fiat to crypto, crypto to fiat, crypto to crypto.)
When applied together, two applications must be submitted and two different licenses are issued.
These activities are regulated by:
- the Money Laundering and Terrorist Financing Prevention Act;
- the procedure for the registration and processing of data collected by the Financial Intelligence Unit;
- the criteria of low risk of money laundering and terrorist financing which allows the application of simplified customer due diligence measures.
The Estonian Financial Intelligence Unit (FIU) issues both the operating licenses above. FIU is an independent structural unit of the Estonian Police and Border Guard Board.
The minimum set of documents required for the license(s) includes:
- a certificate of the register of convictions (‘criminal records’) for each shareholder, board member, ultimate beneficiary owner and responsible person, not older than three months;
- a copy of the passport of all the persons as mentioned above;
- the rules of procedure for AML/CTF purposes.
The certificates of the register of convictions must be in English or Russian and certified with an apostille.
In some cases, FIU might require additional information, including:
- CVs of related persons;
- a description of the planned activities.
Even if the company is qualified as a financial institution, it has no special reporting requirements to tax authorities, and the accounting follows the same rules that apply to any other Estonian company.
Furthermore, no special reporting to the FIU or the Estonian Regulator Finantsinspektsioon (EFSA) is needed. In any case, FIU might require documents and make inquiries about the company’s activities from time to time.
The Estonian E-Residency programme consists of the issue of a digital ID, made available to anyone in the world.
If the applicant company’s director holds an E-Residency card, the application process can be made online.