Cryptocurrencies are widely spreading today and are gaining great popularity. The cryptocurrency market is developing rapidly and irrevocably. As a result, many entrepreneurs are thinking about getting a cryptocurrency license or purchasing a licensed company that is ready for operation. In light of such global trends, we decided to talk about one of the most fundamental topics of the previous year – new regulations for digital currency in the Estonian market. Estonia is a very interesting jurisdiction because it is one of the most favorable environments for cryptocurrency business in the European space.
In 2019, the Financial Intelligence Unit (FIU) issued more than 600 Virtual Currency Service Provider licenses. However, at the end of the year, many of the companies lost their licenses, because they did not begin to carry out commercial activities, thereby failing to comply with the new licensing requirements. According to Estonian law, a company that has received a license must start operating within six months from the date of getting the document.
Historical background
The concept of “cryptocurrency” itself appeared in Estonian legislation back in 2017. Along with this, Estonia became the first EU member state to enact Directive 2015/849, which was the first law to regulate and control cryptocurrencies. Thus, Estonia received the status of one of the most crypto-friendly jurisdictions in the EU.
In the last quarter of 2019, discussions on the introduction of possible amendments to the regulation began at the initiative of the Ministry of Finance.
Changes in the legal regime of Estonia
Now let’s look at the amendments to the regulations made in 2020. It is also worth noting here how the specialists of Eternity Law International can help entrepreneurs to comply with the new legal requirements.
1. The concept of “single license”. The two licenses that were previously required, that is, the license for the cryptocurrency and the exchange, are replaced by one document – the license of the “Virtual currency service provider”.
2. Register of economic activities. The package of documents required to get a license must be sent through a notary office or through an electronic register.
3. The terms of the application consideration. Now the application can be reviewed within 60 days. At the discretion of the regulator, this period can be extended to 120 days.
4. The license fee was increased from 345 to 3.3 thousand euros.
5. New requirements for employers. Key role employers of the company must have an excellent reputation. The data and professional background of executives are carefully checked to ensure they meets high standards. Candidates for leadership positions are required to provide proof of proper education, qualifications, experience and no criminal record. By the way, the Eternity Law International experts have experience in conducting individual checks, which will help the client saving time.
6. Office location. Now the company must be located in Estonia that should be mentioned in the Commercial Register and Articles of Association. A virtual office is not enough.
7. The minimum start-up capital has also been changed and increased to 12 thousand euros. The company can provide capital in digital currency, but the regulator will review such a case on an individual basis.
8. Account changes. The virtual currency service provider must have an open payment account with PI, EMI or a credit institution registered in Estonia or entitled to provide its services in Estonia. This requirement has always been one of the obstacles for entrepreneurs. On the other hand, however, this amendment has made banks and other financial institutions a more conducive and loyal environment for crypto companies. In particular, Eternity Law International has qualified partners (EMI, payment institutions, payment aggregators/processing centers, e-wallets), which provide their services to many of our clients.
9. The company must appoint a compliance officer. His/her purpose is to combat money laundering and terrorist financing. A candidate for this position must have the necessary education to carry out the tasks assigned to him/her by law, professional suitability, appropriate abilities, personal qualities and experience, and perfect reputation.
AML regime
As of today, virtual currency services are governed by the same AML regime that applies to other financial service providers. Eternity Law International has been working in this area for a long time that allow us to find the most suitable solution for your business project.
Summarizing the talk, we want to say
Currently, cryptographic activities are subject to increasingly stringent regulations, and Estonia is no exception, as one of the most important jurisdictions for this industry. Sure, if you look at the trend of tightening cryptographic regulation from a short-term perspective, it carries additional costs, in particular, on the budgets of entrepreneurs. However, if we talk about the long-term effect, this is the formation of the cryptocurrency sphere as a more stable and safer industry, attracting a large number of institutional and individual investors.
Getting a cryptographic license is not easy that leads entrepreneurs to seek professional help. In addition, it is important to structure the business properly in the post-license period, and ensure the organization of cash flow in the interests of the company. To do this, the company should acquire a reliable partner for doing business in such a difficult industry.
Eternity Law International is one of the leaders in the international market for legal services in the field of cryptocurrencies. Eternity Law International specialists will choose a jurisdiction suitable for a specific client’s business model and develop a comprehensive action plan to achieve an excellent result. Moreover, in addition to the other legal services, Eternity Law International offers an extensive list of ready-made licensed companies in Asia, the EEA, the CIS countries, the Middle East and the USA. This solution will help the entrepreneur to save a lot of time and money.