Estonia Crypto-currency Exchange Licence

Estonia has enacted a new Cryptocurrency Exchange licence through the Money Laundering and Terrorist Financing Prevention Act (MLTFPA) under the Financial Intelligence Unit (FIU) that came into being November of 2017 introducing two different types of licenses for cryptocurrency:

Crypto exchange
- provider of a service of exchanging fiat currency against virtual currency
Crypto wallet
- provider of virtual currency wallet services

Estonia is considered a tech pioneer as it was the first country within the European Union to introduce such forms of legislation leading to a dramatic rise in foreign financial investors.

In comparison to other similar licences, such as Singapore of Switzerland, Estonia is less than half the price and can be done in under 6 weeks compared to 3-6 months. Estonia is quickly becoming a leading digital and IT jurisdiction because of its attractive financial legislation which has made the crypto licence process simple and straightforward.

Advantages

Investors enjoy corporate tax exemption on reinvested profits
Convenient location for an ICO
Low 14% tax on dividends paid to legal entities
Options for e-residency card that gives you access to government services
Can easily set-up and connect EU bank account
No restrictions on citizenship or residency

Estonia is one of the first nations whose government has adopted blockchain technology in its national digital identification system, health and commercial registry; though the EU rejected its plan to create Estcoin, a national virtual currency, it continues to implement liberal financial regulations that allows the fintech industry to continue to develop. This has created a perfect haven for crypto startups and fintech entrepreneurs giving rise to crypto ATMs, an expansive financial supports system and other emerging forms of virtual exchanges.

This has largely been a result of Estonia being ranked 1st amongst OECD countries for its internet speed and availability, and its 'ease of doing business' rankings placing it 16th in the OECD by the World Bank and 1st for its International Tax Competitiveness amongst OECD countries. As a result, virtual currencies together with all ICO projects are not subject to VAT or any other forms of taxation. The only taxes incurred on crypto exchanges is when ICO dividends are distributed amongst shareholders.

Corporate Details for Cryptocurrency Licence

0% taxation on all capital gains
2,500 EUR paid-in capital requirements
Local company or foreign-branch office is required
One shareholder and one board member required (can be the same person) together with 3 council members
Corporate shareholders are allowed (but not recommended as criminal records need to be provided for every member in the shareholder company)
Must fill out KYC and AML regulatory policies
Can establish company and financial licence remotely
Local physical office required
Annual submission of financial accounts is required
One management board member required to ensures financial compliance
Easy and quick formation application

Document Requirements:

Criminal record for all related persons (shareholders, board members, and owners)
Passport copies of all above mentioned persons
Complete licece application form

Documents must be in English or Russian and certified with an apostille no older than 3 months.

Some additional information that may be required by officers should it be warranted:

CV
Business proposal

Cryptocurrency License Process

To apply for licence whether it is the cryptocurrency exchange license or the cryptocurrency wallet it must be done through a company that is registered in Estonia or through a registered branch office in Estonia of a foreign company. The steps are straightforward:

Registration of an Estonian Company (1 week)
Submission of Documents and application together with the government licence fee 345 EUR
We receive status of application and whether FIU compliance offer requires any more information or an interview
Upon receipt of the licence registration document (30 days) we will notify of the outcome
Creation of a EU bank account can begin to link your Estonian financial company and exchange with an account

UPDATE: The FIU as of 17 April 2019 has a new policy whereby the FIU has a right contact the individual for a meeting before the issuing of the cryptocurrency licence. The new directive comes as way to continue to combat fraud and money laundering. In case of a meeting request, the client must meet with FIU officials in Estonia within 30 days. Though this happens rarely, it is a possibility. If a meeting is requested and the client does not make it to Estonia within the given deadline, the licence will be rejected.