Can you launch a cryptocurrency trading service that operates according to the law with all the guarantees? Can your startup launch an ICO legally?
Yes. Estonia is considered the most digitally advanced society in the world. And for a good reason. Since it become independent from the former USSR, this small Baltic country has invested heavily in its technological development as a means to modernize their society and boost its economy.
As a result, from the 90s, they have taken a series of measures to digitalize their entire administration, and have granted access to all their public services completely online for their citizens. Here, terms such as “all their public services”, and “online”, differ considerably from the vision that exists in other European countries. Estonia really complies with the “don’t ask me twice policy” and allows you from paying your taxes to checking your children’s homework completely online, securely and conveniently with their digital identity.
The last big step in this direction was the e-Residency program, which allows anyone, regardless of their nationality, to open a business in Estonia and operate their business completely online.
But most importantly, the innovative and forward-looking policies of the Estonian government have promoted a friendly legislation for cryptocurrency business. So let’s say you are a cryptocurrency trader, and you deal with bitcoin, ethereum, litecoin … Did you know that in Estonia you can obtain a license and fully legalize your activity within the framework of an Estonian company?
Your cryptocurrency license in Estonia
Does that mean that I can establish a company and build a cryptotrading website to exchange fiat and crypto currencies? Exactly. All you need is to found a company in Estonia, and apply for the required licenses.
There are two different licenses you can get, depending on what you want to achieve:
- A license for exchanging and trading between fiat currencies and virtual assets (cryptocurrencies).
- A license to provide wallet services to your users (i.e: keeping cryptocurrency or any other kind of tokens on behalf of your users, just as a bank does with the fiat currency of its customers).
Both licenses can be requested simultaneously or individually. While the second license is more oriented to companies that manage their own tokens or coins, and perform ICOs, the first is the one is especially interesting for crypto traders.
Basically, it allows you to regularize your activity, and declare your income and expenses to the Tax Office, like any other business.
How does it work to be a cryptocurrency trader in Estonia?
The first thing you need is to have a company in Estonia. In order to do that, you will need to become an e-Resident. When your company’s up and running, and you have opened a bank account for it, you must apply for the license(s) to the Estonian Financial Intelligence Unit (FIU), a department of the Police And Border Guard of Estonia.
The application process involves a series of documents from you (like your CV, criminal records, and personal data), alongside a series of documents from your company (such as the company’s AML and KYC policies). This documentation needs to be notarized (with an apostille), translated to Estonian and reviewed, but worry not. In Your Company In Estonia we can help you launch your cryptocurrency company and obtain the required licenses.
The company is considered a financial institution, but does not have any exceptional requirement when reporting taxes to the authorities. You need to do your bookkeeping like any other company. Accountancy is, however, a lot more complex, due to the need of having an expert in cryptocurrency accounting. Also, the FIU may, at any time, request a report on the activities of the company. Apart from that, it will work just like any other company.
Once the application is submitted, there’s a 30-days maximum response period. That means that, in approximately a month, you will know if your application was approved or not.
What about the bank account?
Unfortunately, Estonian banks are not keen on opening bank accounts for crypto companies. However, there are other banks -mostly fintech solutions outside of Estonia- that are quite friendly to crypto-businesses. You need to be aware that the KYC -know your customer- process is going to be a lot more strict, and you will be asked for a lot more information about you and your business.
Therefore, transparency and willingness to collaborate with the Estonian authorities are key points. If your activity is legitimate, your intentions are honest, and you just want to regularize your activity, your application will most probably succeed and you will enjoy a legal framework to build and grow your crypto-business.
In Your Company In Estonia, we can help you open the bank account for your cryptocurrency business or exchange. We work with banks that will open a bank account for your business, and know how to get the required documentation they will request from you.
The reputation of Estonia as the most digitally advanced country in the world is well deserved. Not only because of the digitalization of its entire administration, and the e-Residency program -which allows anyone, regardless of their nationality, to open a company in Estonia- but also because it is one of the most favorable countries for startups working with technologies such as the blockchain and cryptocurrencies .
Proof of that is that the country allows you to obtain licenses for cryptocurrency trading. So you can, for instance, become a cryptotrader legally in Estonia. And the best of all, you can launch and run that crypto-company completely online, and manage if from anywhere in the world.