CORPORATE SERVICE PROVIDERS IN BALTICS

advanced blockchain legislation

Licensed Cryptocurrency company in Estonia

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Virtual currency exchange license

virtual currency exchange gainst fiat / virtual currency


Package includes:

  • Company incorporation in Estonia

  • Contact person in Estonia in the first year*

  • Application for the license

  • Preparation of AML / KYC documents

  • State fee


Under this license company is authorised to provide services of exchanging a virtual currency against fiat currencies, back to fiat or between virtual currencies (spot transactions).

*Contact person fee in the following years: EUR 350

  • Timescale to obtain license: 30 business days after company incorporation.

  • Price: EUR 2000,00 per license | EUR 3000,00 if customer applies for both licenses together

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E-Wallet service provider license

virtual currency wallet service provider license


Package includes:

  • Company incorporation in Estonia

  • Contact person in Estonia in the first year*

  • Application for the license

  • Preparation of AML / KYC documents

  • State fee


License allows to create or maintain clients’ encrypted keys that can be used to store or transfer virtual currency.

 
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General requirements for cryptocurrency companies

 

Licenses are issued by Financial Intelligence Unit which is one of the independent bodies operating under Estonian Police and Border Guard Board. Buying and selling virtual currencies is a subject to money laundering prevention regulations which stipulates that in order to offer the service of exchange of virtual currency and the service of virtual currency wallet, an appropriate authorisation must be granted from FIU.

Required Documents:

  • Certificate of the register of convictions (Criminal record) for all involved persons. This includes shareholders, members of the board, ultimate beneficial owners. Previous criminal conviction is one of the most common reasons why FIU rejects to grant licenses.

  • Copies of personal identification documents of all involved persons.

  • Rules of procedure. Internal document which states how company will follow KYC and AML guidelines. Documents must include information with regards to what technical protocols will company use to collect / protect customers data.

  • CV's of all involved persons.

  • Description of planned business activities. Summary of company's business plan where company illustrates main points of planned business activities.

All documents must be apostilled and in English.

 

 

Procedure:

  1. Application for the license must be submitted by Estonian company or a branch of foreign company registered in Estonia. GATE TO BALTICS recommends to create a new company in Estonia, because it is faster and easier to apply for the license with separate legal entity, instead of a branch.

  2. After company is registered, GATE TO BALTICS will prepare all required documents and submit them to the FIU.

  3. Timescale for company incorporation can be divided in two parts:

    1. Company registration in Estonia. Varies between 3 - 10 business days, depending on the corporate structure of the company and (non)existence of e-Residency card of the signatory persons.

    2. Licensing procedure. According to MLTFPA, Financial Intelligence Unit will review documents in 30 business days, following the date of filing. FIU always holds the rights to ask additional information, therefore we recommend to our customers to be as detailed as possible from beginning.

Important updates. New requirements for cryptocurrency companies in estonia

1.Meeting Request.

From April 2019, FIU may request a personal meeting with representative of the company. The FIU required personal meeting with the compliance officer from the company. If the compliance officer is not member of the board or share holder (official of the company), then there must be employment agreement which will illustrate relationships between licensed company and compliance officer. It is important to mention that meeting is held in Estonian language and interpreter is necessary. We are able to provide experienced interpreter for a fee EUR 150,00 per meeting.

If the FIU requests a personal meeting, then customer has a 30 days to arrive in Tallinn. License will be granted after the meeting. If company in question does not reply to the meeting request in 30 days, then the FIU will close the case which will result in refusal of the license. Meeting lasts approximately 2 hours and prior to the meeting, our lawyers will prepare the responsible person by providing the legal framework towards AML regulations in Estonia.

2.Amendments in MLTFPA

Currently Estonian Parliament is reviewing changes in Money Laundering and Terrorist Financing Prevention Act. With high certainty the amendments will take effect from January 2020 and will be applied to all new licensing applications as well as to companies holding crypto exchange and e-wallet service provider licenses in Estonia. When approved, the amendments will include following requirements:

  • Application fee will be raised from EUR 345 per license to EUR 3300;

  • Company’s headquarter and management will be required to be located in Estonia;

  • Application review time will be increased from 30 days up to 3 months.

Considering the new amendments, we recommend to make sure if company willing to apply for licenses, will be able to follow the new requirements. If so, then we recommend to begin application process while the new requirements are not in place, in order to pay EUR 345, instead of EUR 3300 per license.

We are closely following process in Parliament and as soon as the new law will be published, we will provide several solutions for new companies, as well as to companies who are holding crypto licenses at the moment.

 

 

Most common reasons for refusal of the license:

  1. Previous criminal record.

  2. Complex corporate structure. If FIU will have doubts about the ultimate beneficial owners due to the complex corporate structure, application will be declined.

  3. “Low-tax” jurisdiction involvement in the company structure. Even though, it is not illegal, per se, it makes corporate structure less transparent. Also, in most offshore jurisdictions, it is not possible to obtain Certificate from register of convictions which shows that company has clear history. Please note that it is not the same as Certificate of Good Standing.

  4. Unclear business description plan. When entering regulated field, company should have clear business description plan and vision how will it develop virtual currency exchange / wallet business.

 

 

Bank account opening

It is no secret that companies who are in business with anything "crypto" related will face harder KYC procedures during bank account opening. There are several “crypto-friendly” banks in Estonia which will require personal meeting with the management board and company will have to go through additional background checks. We do have a positive history with opening accounts in banks and payment service providers also in other EU countries. Each case of bank account opening is different, therefore we are not able to give 100% guarantee to the customer that account will be opened as it depends on banks KYC process and customers' cooperation during it. As long as company's structure is transparent, UBO has a clear track record and company has a good business description plan, there shouldn't be problems to open account in EU. 

Our experience shows that cryptocurrency companies which are licensed in Estonia has much higher chances in opening bank accounts than the ones without the license. Licensed company illustrates that it must follow certain Rules of procedure set out by government of Estonia as well as that government of Estonia has already done background check of the company and has approved it's business model. Even though, it does not minimize the responsibility of the financial institution where company opens a bank account, it provides impression that company is "clear" and comes from reputable EU jurisdiction. 

 

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