Virtual currency exchange and wallet service provider licenses
From 27.11.2017 a new „Money Laundering and Terrorist Financing Prevention Act“ entered into force and according to this act companies that deal with virtual currencies can apply for 2 different activity licences:
- providers of a service of exchanging a virtual currency against a fiat currency
- providers of a virtual currency wallet service
The licence is issued by Financial Intelligence Unit (FIU).
These licenses can be applied separately one by one or together on one activity licence. Before applying for the licence, an analysis of your future activity is required.
The Estonian Financial Supervisory Authority (EFSA) states that coins and tokens may in some cases be qualified as securities according to the Estonian legislation, which means that the regulations and activity licences may be different.
In case you think your company's planned business is not within the scope of the above activities, we recommend that you take a preliminary legal analysis in order to find out which activity license or registration your business model requires.
To avoid waste of time and money, we can arrange a preliminary legal analysis at reasonable costs - to determine whether your business activities fall under one or both of these activities or not. To do so we need your simple business explanation / White list. Usually the preliminary analysis can be provided in few days.
European Securities and Markets Authority (ESMA) alerts firms involved in Initial Coin Offerings (ICOs)
about the need to meet relevant regulatory requirements.
Initial coin offering (ICO) in Estonia
The Estonian Financial Supervisory Authority (EFSA) is of opinion that tokens in terms of the offerings mentioned above, depending on their structure, might be considered as securities according to the definition set forth in the current Securities Market Act (SMA) as well as in the Law of Obligations Act (LOA). In assessing whether or not securities laws apply, the EFSA states that substance should be considered over form.
Every ICO is unique and should be assessed on its own characteristics. The EFSA explains that tokens which give investors certain rights in the issuer company or whose value is tied to the future profits or success of a business are likely to be considered securities in the meaning of § 2 of the SMA. Therefore, the offering of such tokens may constitute as the issue of securities and, depending on its exact nature, be governed by the rules that of public offering as prescribed in § 12 of the SMA. That being the case, it is required to register a respective prospectus in the EFSA.
As regards to ICOs encompassing the offering of instruments qualified as securities, it is important to note that the entities facilitating such ICOs or secondary trading of such tokens may be considered as providing investment services as stipulated in § 43 of the SMA. In particular, by organising such an offer or issuing tokens or bringing together the interests for acquisition and transfer of tokens under uniform conditions. The abovementioned services may be provided as a permanent activity only by authorised entities.
The EFSA notes that ICOs may also be governed by the Credit Institutions Act (CIA). This might be in the case where the main activity of the business is to provide loans on its own name and account and such activity is being financed through the repayable funds received from the public in the form of an ICO.
To conclude with, the EFSA states that although a new technology is involved, and what is being sold is referred to as a token instead of a share or equity, a token may still qualify as a security as set forth in the Estonian legislation. Businesses should complete an analysis on whether a security is involved.
Once we have all initial information from you it takes usually 1-2 days to create the company.
In case you choose ready made company - it is already created and ready to be transferred to you.
To transfer company to your name you need to visit Estonia for 1 day. During that day we transfer the company shares and board membership to you. Changes will be visible in register in few days (max 1 week).
In case you want to start the company remotely (without visiting Estonia) - it takes usually 2-3 weeks additional time and involves some additional costs.
Registration for virtual currency services license
After the company is registered and we have received from you certificate of the register of convictions and passport copies, we can do the rest of the job and apply for the license.
Documents mentioned above must be presented for all involved private person(s) (shareholders, board members, beneficiary owners, responcible person)
As a rule all documents must be in english (or russian) and certified with an apostille.
The process of an application
An application for activity licence shall be processed by the Financial Intelligence Unit (FIU) by granting or refusing to grant the activity licence within 30 working days as of the date of submission of the application.
During the process FIU has the right to request additional information and explanations about the planned activity. License will be issued after all required info is concidered sufficient and conditions fulfilled.
Real results of license registrations
Currently we have succeeded to get above mentioned licenses registered in ca 2 weeks with 100% success rate.
Opening bank account
Opening bank account for "cryptocurrency company" is realistic but not guaranteed process. After you have the virtual currency exchange and/or wallet service provider license you have legal ground to apply for bank account opening.
Most crucial for opening bank account for "cryptocurrency company" is transparency of the business.
It is important that at least some of the shareholders or board members have professional skills in this business area, which could be proven for example with Linkedin account or CV.
As we all know there are many companies all around the world who operate in that area and have bank accounts, which means it is doable if you have enough patience.
Have a professional support from KRM Advisor
Over the last years we have successfully established tens of companies with the FUI licence.
If you are interested to set up a cryptocurrency company please fill in your contact information below: