Estonia crypto license

Estonia, part of the EU, is a place where tech thrives. It’s where Skype and many other innovative apps were born. Estonia was first in digital business registration, enabling companies to be set up quickly and remotely. This user-friendly mindset is seen in services like online birth registration, checking school grades, and parking payment. These services have been around for more than ten years. Known for liberal laws, straightforward business practices, and a strong banking sector, Estonia welcomes foreign investors. When digital currencies came into the picture, Estonia adapted its laws to support these new businesses. Also, here has created comfortable conditions for foreign investors and you can easy open company in Estonia. Today, Estonia is seen as a supportive place for digital ventures in the European Community. We’ll delve into how to get a crypto license in Estonia, highlighting the benefits and the steps to get the crypto license Estonia offers.
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To get a deep understanding of Estonia's digital asset market, we examined some key data:
  • Expected Revenue (2023): A Statista report suggests that the revenue in 2023 could reach a significant €14.91 million. This figure shows the great growth potential of the digital asset market in Estonia.
  • Projected Development (2023-2027): The market is projected to grow at an approximate Compound Annual Growth Rate (CAGR) of 15.06% from 2023 to 2027. With this rate of expansion, the market’s valuation might potentially hit a remarkable €26.13 million by 2027.
  • Revenue Per User (2023): In 2023, the average revenue per user in the digital asset market is expected to be €53.3. This figure points to the market’s profitability.
  • Global Revenue Comparison: The United States is projected to lead with estimated revenue of €26.74 million in 2023. But, Estonia’s smaller market still has significant growth potential.
  • User Growth Projection: The number of users in Estonia’s Digital Asset market is predicted to increase substantially. It’s estimated to reach around 342.7 thousand users by 2027.
  • User Penetration Rate: The rate of digital asset use in Estonia is set to increase from 21.0% in 2023 to 26.0% by 2027. This growth shows a rising acceptance and use of digital assets in Estonia.

Estonia's Approach to Cryptocurrency

Pursuant to Article 3 of the Estonian Anti-Money Laundering Act, a cryptocurrency is defined as a virtual currency that is not an official currency of any country, has value represented in digital form, can be stored, traded, and accepted as means of payment by individuals and legal entities.

What is Estonia crypto license?

In Estonia, a crypto license is a special permit for businesses related to digital assets. This includes popular global exchanges like Payer Exchange and Crex24. The appeal of this license is Estonia’s clear-cut laws and uncomplicated registration process.
The National Financial Intelligence Unit in Estonia is the issuer of these licenses. They ensure companies stick to the rules on money laundering and terrorist financing. With a crypto license, a company can offer services such as digital wallets or help with digital asset exchange. Before, this business required two licenses. Now, the only one is the Virtual Currency Service Provider License.
Before giving a license, the Estonian government makes sure that the company complies with all the laws. This is to safeguard the public from scams and ensure fair business practices.
In easier words, we’ll call firms providing Virtual Currency Services as VASPs. Their license will be referred to as the Estonian crypto license.
According to Article 3 of the Estonian Anti-Money Laundering Act, a virtual asset service provider (VASP) may provide the following services in Estonia:
  • Virtual Currency Wallet Service (Custody Services). An entity can provide clients with the ability to create or maintain encrypted keys. These keys can be used to hold, store, and transfer virtual currencies.
  • Virtual Currency Exchange Service. An entity can enable the exchange of virtual currency against fiat money or one virtual currency against another.
  • Virtual Currency Transfer Service. An entity can facilitate the electronic transaction of virtual currency. The purpose of this service is to transfer virtual currency to the recipient’s virtual wallet or account.
  • Issuance of Virtual Currency: An entity can organize a public or targeted offering or sale for the issuer of a virtual currency. Or, they can provide related financial services on behalf of or in the interest of the issuer.
Under Estonia’s AML Act, Virtual Asset Service Providers (VASPs) must meet certain rules. These rules are detailed and include, but aren’t limited to, these main areas:
  • Licensing. All VASPs must have a license. Getting the necessary licenses to do their business is a must. This rule helps make sure that VASPs’ operations are legal and responsible (Article 70 of Estonia’s AML Act).
  • Disclosure of Information. VASPs have to share detailed financial and operational information. These include specifics about their assets, capital, income, expenditures, profits, and cash flows. Moreover, they must share the basic ideas behind their business model. This encourages openness and helps others better understand and assess their business model and financial health (Article 70 of Estonia’s AML Act).
  • Compliance Requirements. VASPs should maintain strict transparency in their work, including ensuring that all key staff have no criminal records. Not following these rules can result in the loss of their operational license (Article 75 of Estonia’s AML Act).
  • Cooperation with Authorities: VASPs are obligated to provide necessary information to the Rahapesu Andmebüroo (Money Laundering Data Bureau). This includes business secrets and data relevant to anti-money laundering and counter-terrorist financing. It’s essential to note that VASPs must follow these requirements within the set deadlines (Article 58 of Estonia’s AML Act). (Article 58 of Estonia’s AML Act).
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Why should you choose to receive a crypto license in Еstonia?

Although the state is distinguished by transparent legislation and a very simple online business registration procedure, it will be quite problematic to acquire an Estonian cryptocurrency license without legal support. To request the permit, you must first register a local enterprise and get an account with a regional depository financial institution; for this, you need to follow certain anti-money laundering and “know your customer” procedures and go through due diligence at the bank.
There have been many fraudulent schemes lately, so the Estonian Financial Intelligence Unit closely monitors Estonian crypto licenses. The provisions have evolved much more stringent, especially for brand-new enterprises and startups. Government agencies request a complex package of documents, including the origin of cash in hand and biographies of all involved individuals of the company – managers, beneficial owners, and founders. A certified compliance officer and local representative must be appointed to represent the interests of the enterprise with the permitting authorities. In addition, all privacy policies and Terms of Service on the company’s internet site must be carefully worked out so as not to arouse any suspicion. You must utilize qualified legal assistance to submit all documents the first time and minimize the waiting time for a permit.
Fintecharbor consultants have an extensive background in getting digital business permissions in many European jurisdictions and monitor all modifications in lawmaking. We may serve you in choosing the best country for registering your business and advise on all the nuances of receiving certificates, accounting, and tax reporting.

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How much does it cost to get a crypto license?

Starting from March 2022, the strategy for registering documents has become tougher. As we wrote above, the fixed charge has increased to 10,000 euros. The authorized capital has also increased, at least 100,000 or 250,000 euros must be paid.
Besides obtaining the necessary permits and licenses, there are other critical steps that new businesses need to take. One of these is registering a legal entity, which gives your business an official existence in the eyes of the law. This process can be quite complicated and involves various legal documents and procedures.
Additionally, opening a business account with a local bank is another important requirement. Having a business bank account is not only a legal requirement in many jurisdictions, but it also helps to separate your personal finances from your business finances, which is good practice for financial management and tax purposes.

The strategy of starting a crypto business in Еstonia

To conduct activities related to Bitcoin and other virtual currencies and acquire the appropriate approval, you first need to incorporate a legal entity in Estonia. Then the firm can then go for a relevant permit.
The routine of acquiring a cryptocurrency license in Estonia consists of the subsequent steps:
Fintecharbor lawyers will help you prepare a package of papers and escort you at all stages of enrollment and acquiring a license.
The certificate is officially referred to as the “License of the virtual currency service provider.” It enables the owner to supply act as manager of a virtual coin wallet and exchange cryptocurrencies, both among themselves (for example, Bitcoin to Ethereum) and for fiat money (dollars, euros, and others). Having received a mandate, one can control online wallets and deliver custody services. For example, make and keep encrypted keys. The firm can also act as a foreign exchange.

The process to receive a crypto license in Еstonia. New legislation affecting the crypto industry

It was feasible to register an exchange or get a warrant for a cryptocurrency in Estonia in 2017. However, in connection with fraud lawsuits, parliament revised the lawmaking and tightened the obligations for existing companies and new applicants in March 2022. The accredits were simply canceled for anyone who did not manage to provide the regulator with a package of documents before June of this year.
So, in early 2022, new rules will apply to institutions functioning with virtual currencies and digital assets. Let’s consider the main changes.
Application process
Before 2020 any petition for a permit was evaluated for 60 days; today the review period was expanded to 120. Also, documents should be introduced only through agents of a notary office or commercial register.
Substance requirements
All digital money-related businesses need a real existence in Estonia. This means that a corporation is not non-resident or offshore in the classical sense, carrying out activities outside the state. It is essential to have an actual place of business providing management from the country.
Firm employees
The regulator carefully checks the biographies of all crypto institution officials. If anyone is involved in a fraudulent scheme, this person cannot be a director or official representative. To welcome a permit to conduct crypto activities, it is required to provide papers demonstrating the appropriate education of officials, their experience in this field of business, as well as the absence of a criminal record.
Anti-money laundering
Previously, AML requirements only applied to banking and financial service providers. This is now affecting cryptocurrency businesses as well. In particular, the controller’s representatives can call the office of the enterprise with a check without warning.
Corporate account
Financial organizations are commonly reluctant to provide accounts for crypto startups. According to the law, the account must be with a local or international bank right-handed to operate in the state.
Authorized capital
The authorized capital of a crypto establishment cannot be less than 250,000 euros to offer virtual currency transfer services and 100,000 euros to offer virtual currency exchange services. In this case, the entire amount must be paid in cash.
Government duty
Obtaining a cryptocurrency warrant has not only become more complicated but also more expensive. Nowadays, applicants must pay 10,000 euros.
It can be said that the Estonia cryptocurrency license check and registration process have become more complicated. However, the requirements are feasible. The governing body acts with the global financial trends transparency and does everything possible for comfortable commerce.

What are the taxes in Estonia?

On January 1, 2000, Estonia made a major change to its corporate tax system. The traditional corporate income tax was eliminated. Instead, a flat-rate tax on distributed profits was introduced.
Companies in Estonia do not pay corporate income tax as most countries do. They pay a tax on distributed profits, including transactions considered as hidden profit distributions (such as fringe benefits, gifts, and non-business expenses). No tax is applied to retained earnings.
When you start a crypto company in Estonia, your business becomes a tax resident. This means your company is added to Estonia’s list of taxpayers. But, for Value-Added Tax (VAT), you’ll need to go through a different registration process.
The following taxes apply to companies registered in Estonia:
  • Tax on company profits – 0 – 20%;
  • The taxable base is the positive difference between the sale price and the purchase price of the assets;
  • Social security contribution: 33% + 0.8% unemployment insurance contribution.
  • VAT basic rate – 20%.

Taxes on corporate income

  • If a company in Estonia doesn’t distribute its profits, it doesn’t pay tax. This rule includes both types of earnings: those that come from direct actions like buying and selling, and those that are received indirectly like profits from investments, loan interests, and payment for use of assets.
  • When a company distributes its earnings, it typically needs to pay a 20% corporate income tax. This means if a company gives out €100 as profit, it needs to contribute €20 as tax.
  • If a company regularly shares its profits, it might qualify for a 14% tax rate.
Companies that are based in Estonia are required to pay tax on all their profits, regardless of where these profits are generated. This means that if an Estonian company makes money in any part of the world, that money is subject to tax in Estonia.

VAT rates in Estonia

VAT is charged on each taxable supply of goods and services, in other words, on each supply of goods and services made in Estonia by a taxable entity in the course of its business activities, unless such supply is exempt from tax according to the provisions of the law.
According to Article 15 of the Estonian VAT Act, the following value added tax rates apply in Estonia:
  • 20% – the standard rate for most goods and services;
  • 9% – reduced rate (applies to books, medicines, and tickets for concerts or performances);
  • 5% – reduced rate (applies to physical and electronic publications in the press);
  • 0% – for all exceptions provided for in the Estonian VAT Act.

Social Security contributions

In Estonia, employers are required to contribute 33.8% of employees’ wages to the National Insurance Fund. This contribution includes:
  • 33% of the employee’s salary – social security contribution;
  • 0.8% of an employee’s salary – unemployment insurance contribution.
Based on the above, we can conclude that taxes in Estonia are quite reasonable by the standards of the European Union, which makes Estonia an attractive jurisdiction.

European case law on the application of VAT to cryptocurrency transactions

In a landmark decision in 2015, the European Court ruled that the purchase of bitcoins or other cryptocurrencies is exempt from Value Added Tax (VAT) for EU member states.
Case summary:
  • Mr. Hedqvist wanted a clear interpretation from the Swedish Revenue Law Commission about how VAT applies to Bitcoin transactions.
  • The main question in this case, was about how to understand Articles 2(1)(c), 135(1)(d), 135(1)(e), and 135(1)(f) of the EU VAT Directive.
  • The court decided that Bitcoin is a type of payment contract. It lets direct transactions happen between parties that accept it.
  • The court decided that trading traditional currencies for bitcoins is a service. It falls under Article 2(1)(c), as it includes the difference between the buying and selling price of the currency.
  • Bitcoin transactions don’t meet the exemption criteria under this Article. Bitcoin doesn’t match the specific financial instruments described.
  • The court said that Article 135(1)(e) covers transactions involving non-traditional currencies like Bitcoin. This is if they are an accepted alternative to legal tender. This means these transactions don’t have to pay VAT.
  • As Bitcoin isn’t a security that gives a property right or a similar security, transactions involving it don’t fall under this Article 135(1)(f).

Impact on Estonia:

While the ruling isn’t a guaranteed rule stating VAT won’t be applied to digital currency dealings, it’s had a considerable effect on the burgeoning Estonian crypto sector.
This judgement lends more legal assurance to crypto businesses across the European Union, and it also makes Estonia a more attractive hub for crypto initiatives.
As part of the European Union, it’s necessary for Estonia to match its own laws with those directives and court decisions made by the EU.
This particular ruling aids the tax laws in Estonia. It boosts both the European Union and Estonia’s place in the crypto market scene, broadly and in specific cases.

European case law on the application of VAT to cryptocurrency transactions

FIU shared in May 2023 that significant changes occurred in the Estonian cryptocurrency market due to amendments to the AML Act. These changes, effective March 15, 2022, led to the termination of 389 licenses owned by virtual asset providers. As of 1 May 2023, only 100 licenses are still active.
Because of the stricter requirements, service providers revoked about 200 licenses. The FIU has revoked about the same number of licenses for noncompliance. FIU Director Mathis Määcker said these changes were necessary because of the high risk of money laundering.
In reviewing the applications, the FIU found several identical business plans. The FIU continues to review licenses and maintains supervision to reduce these risks.
Changes in the Anti-Money Laundering Law have hit Estonia’s crypto business. The number of active licenses has dropped to 100 from 650 in 2021 because of stricter rules.
The Financial Intelligence Unit (FIU) has found several issues when reviewing applications. Some companies showed signs of suspicious activities, like false CVs and duplicate business plans.


Cooperation with Fintecharbor was a pleasant surprise for us. Lawyers helped us to collect a large package of papers and applied as soon as possible.
Thanks to Fintecharbor, we were able to get a permit and start up a European cryptocurrency exchange faster than planned. The consultants were in touch 24 hours a day and always answered all our questions.
We really liked the proactive approach of Fintecharbor lawyers. At the very beginning, we were told in detail about all the stages of registration and provided a detailed estimate. We knew about every step and did not have any unexpected expenses. Highly recommend.


With an Estonia cryptocurrency license, you can execute these activities:

  • Virtual Currency Wallet Service (Custody Services)
  • Virtual Currency Exchange Service
  • Virtual Currency Transfer Service
  • Issuance of Virtual Currency.
For those players that already have a resident legal entity and a bank account, the period for receiving will be 120 days from the day of filling up the Estonia cryptocurrency license register. For the rest, the path will be somewhat more complicated and longer. The incorporation of a legal entity in the land is held online. There is no need for a foreign director to pay a personal visit. It is enough to collect a complete package of documents, translate it into English or Estonian, certify it with an apostille, and submit it to the Commercial Register. The Fintecharbor team will help you collect the essential documents as soon as possible and arrange them in harmony with the provisions of the regulation. Depending on the chosen bank, setting up an account will take one to two months. The reality is that every bank in the European Union is guided by anti-money laundering legislation and requires a detailed package of documents, including data on the origin of finances, biographies of company proprietors, and all involved persons. The document verification procedure can take more than a month. We help to open an account in those depository financial institutions that have a favorable attitude towards crypto business and set up accounts for virtual financial startups, even newly registered firms. On average, when planning the timing of getting a permit for crypto Estonia, one should allow at least 6 months.

To acquire a state license to operate with virtual currencies, you must first set up a firm in the territory. To do this, you should collect a bundle of documents, prepare a legal address, and pay authorized capital in the required amount.

Only then you can sign up for digital money consent in this Baltic State. The subsequent papers are essential to be presented to the Estonian Financial Intelligence Unit:

  • The certificate number and business organization name.
  • Corporate contact details.
  • A brief description of the establishment operations.
  • Internal procedures and policies intended to prevent money laundering.
  • Personal information of a compliance officer (must be certified individual).
  • Copies of passports of all related persons from all countries of citizenship.
  • Information about the lack of criminal history of all related persons regardless of legal status.
  • Professional resumes and scans of diplomas from all authorized individuals of the organization.
  • Business plan and business projections for at least two years.
  • Request for a virtual asset provider license.
  • Remittance for payment of the government duty.
  • Details on existing deposit accounts in an EEA country with cross-border functions.
  • List of accounts opened on behalf of the corporation, together with an IBAN of each.

The petition for crypto empowerment takes place through a firm enlisted in the homeland or a registered branch of a foreign corporation.

Yes, according to Estonian law, a crypto license does not have an expiry date. This means that once a holder receives a license, he can operate, as long as he complies with all relevant regulations and standards.
  • Legal Activity

By obtaining a license you can legally perform all activities permitted by VASPs in Estonia without undesirable consequences.

Section 70 of the Estonian Anti-Money Laundering Act states that a license is a must if you’re planning to provide virtual asset services.

So, what’s the fallout if a company providing these services doesn’t adhere to this rule? Well, they could end up facing a host of penalties. This could range from administrative punishments, like fines, to possibly even a halt in their operations. If the company’s infractions are significant, criminal charges might be on the table too. The exact penalties will hinge on the severity and nature of the infractions.

  • Marketing

With a crypto license you can advertise your cryptocurrency services on platforms like META or Google. Having a license makes you a more reliable partner for the largest advertising service providers.

It’s crucial to know that if a company doesn’t own a crypto license, it can’t advertise its cryptocurrency services on platforms like META or Google. These platforms have strict rules businesses must obey. One rule is that any cryptocurrency business, like those offering crypto trading, needs to have a valid license. This license shows they follow the law. If a company lacks this crypto license, the platforms won’t let it advertise. META and Google do this to make sure businesses on their platforms are legal and ethical. This protects their name and their users from scams or illegal actions. So, a crypto license is vital for a company that wants to use META or Google Ads to reach more people and increase its customers.

For example, according to META’s rules, if you want to advertise anything to do with cryptocurrencies, such as trading platforms, software, or services that let people earn, resell, swap, or ‘stake’ cryptocurrencies, you can’t start advertising. You can’t place these ads unless you have got written permission before. To get this permission, you have to follow a specific process. As an advertiser, you need to first hand over a recognized license or registration. This document proves you follow the rules for your business type. After giving this, you need to get written permission from META. Once you have completed these steps, you can start advertising your products or services.

For Estonia, you need to provide the Virtual Currency Service authorization from the FIU.

  • Bank accounts

Possibility to open a corporate account with a bank or PSP.

It’s against the law to offer virtual asset services without a license. That’s why banks and Payment Service Providers (PSPs) frequently ask for license proof before they open a corporate account. Cryptocurrency activities are viewed as high-risk. So, not having a license can lead to an outright denial to open an account.

  • Trust

Last but not least is trust. Having a license builds trust and credibility.

The FTX bankruptcy highlights the importance of reputation in the cryptocurrency world. This business relies on the trust of users, partners, and regulators, which can suffer in times of instability. Having a recognized crypto license, such as Virtual Currency Service Provider in Estonia, can help assure all parties of a company’s commitment to complying with financial regulations.

BUSD is a case in point. It’s a stablecoin, linked to the US dollar, and is issued by Binance. Paxos, the custodian of the US dollars backing BUSD, ran into issues in 2021. Part of BUSD’s reserves were frozen due to regulatory compliance issues. Also, the U.S. SEC has expressed concerns about the ability of Paxos, a Binance-affiliated company, to follow federal securities laws.

Both the FTX and Paxos cases remind us of the importance of trust and regulation in the crypto industry. A crypto license can play a critical role in bolstering a company’s reputation. This protects all stakeholders and fosters a sense of trust in an industry known for its risks and rewards.

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