All about Estonia Cryptocurrency Exchange and Wallet Service Provider License

The Estonian Financial Supervisory Authority (EFSA) though an Application for a cryptocurrency exchange and wallet service provider license, must be submitted to the Register of Economic Activities.

  1. Brokers for exchanging a virtual currency against a fiat currency (it authorises exchanging fiat to crypto, crypto to fiat, crypto to crypto).
  2. Providers of a virtual currency wallet service (it authorises the provision of virtual currency wallet service in the framework of which the Firm/Broker/Financial Institution generates keys for clients, or holds possession of clients’ encrypted keys, to be used for the purpose of safekeeping or transferring virtual currencies).

The licenses are issued by the Estonian Financial Intelligence Unit (FIU), being an independent unit of the Estonian Police and Border Guard Board.  To obtain a Cryptocurrency Exchange and Wallet Service Provider Licence two applications must be submitted and therefore two licences will be issued.

Once the licence is issued the Firm qualifies as a Financial Institution but exempted from special reporting requirements to the local inland revenue.  However, accounting records must be prepared.

The FIU has the absolute discretion to revoke any authorization in cases where:
  • the Financial Institution repeatedly fails to follow the instructions of the supervisory authority; or, where
  • the Financial Institution has failed to commence operations as licensed within six months from the authorization date.

    • Company Formation

    Subject to successful KYC and due diligence, company formation in Estonia takes about 2-3 weeks without the need of the shareholder/director to visit Estonia.  Time can be shortened to up to 5 working days in the event the shareholder/director visits Estonia.

    Licensing process for virtual currency services  Following the incorporation of a local Estonian company, an application is submitted to the Financial Intelligence Unit (FIU); The process for the FIU's decision takes from 25 to 50 days from submission date.

    It should be noted that in case of coins and tokens, the Estonian Financial Supervisory Authority (EFSA) may qualify them as securities as per local legislation; In this case the regulation will differ.

    Company structure

  • At least one shareholder (natural person or legal entity, no restrictions with regards to citizenship or residence)
  • At least one director (foreign residents are allowed)
    Taxation
  • 20% income tax to the distributed profits (actual and deemed)
    Accounting
  • Filing annual financial report is obligatory with accounting records to be kept in Estonia
    Registered Agent and local office
  • Registered Agent is required if there are no EU residents in the Board of Directors
  • Local Registered office is required.

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