🇪🇪 Major changes in the Estonian crypto license

8 April 2020

Real talk about the main requirements & issues when you would like to run your crypto business in Estonia and in Liechtenstein as well as the major changes in the Estonian crypto license.

Yanina: Hi everyone, I’m Yanina Petrovskaya from RLP Lawyers, Liechtenstein. Today I have a wonderful guest and also a wonderful colleague – a lawyer from Estonia. And we are going to discuss in brief what are the main requirements and the main issues when you would like to run your crypto business in Estonia and in Liechtenstein.

Anna: Hello everyone! It is very nice to meet you all. My name is Anna Agu, I’m from Estonia. I am a partner of Lex Law Office, based in Estonia. I will be happy to share my knowledge regarding the crypto regulation and possibilities in Estonia. 

Y: The main question is actually what is this type of license you can get in Estonia? And what are the major changes to the requirements of this type of license that were introduced recently as we’ve heard? So what do projects have to expect?

A: So what we have for now: from the 10th of March our regulation was changed and at the moment in Estonia it is possible to obtain for one license – it is a crypto provider license that gives you an opportunity to provide all kinds of services connected with the virtual assets. It means that you will be able to exchange crypto to fiat, fiat to crypto, crypto to crypto, and also to provide custodial wallet services. Before the 10th of March, we had two licenses, but for now, it will be one license for all services. So it will make the process easier for the companies.

Y: OK, that sounds really great…

A: And also the main changes, sorry, I have missed them. So we have a list of additional requirements from the 10th of March. 

The first and main additional condition is to have a local member board for the company. It means that one of the members of the board should have the citizenship of Estonia or a permanent living or a residency permit. 

The second condition is to have an initial capital of 12,000 Euros. It should be paid before obtaining the license. 

The third condition is that there should be a bank account opened for the company in the European Economic Area. It will be accepted not only in Estonian banks or financial institutions. 

And the fourth is the condition to have the office in Estonia. It is important for the company to have a real office in Estonia, not just a virtual office. 

And the fifth is to have a money laundering officer. So it will be a contact person between the authorities and the company who will report regarding any compliance issues.

Y: I see… So they introduced really important requirements. I also heard in the past crypto projects from Estonia had issues with opening bank accounts in Estonia. Do you have any working solutions for now that you offer?

A: Yes, for sure. Our legislation has changed from 2019, and at the moment it is possible to open bank accounts for Estonian companies in the European Economic Area, it will be acceptable. So there is no need to open a bank account in the Estonian banks. So at the moment, it is not the issue and we have a good relationship and partnership with the banks in the European Union. So we can suggest different solutions for our clients. So banking will not be a problem for them.

Y: I see, that sounds really nice. And we are really interested to get those updates from the person who has this hands-on experience working with crypto projects in Estonia, opening bank accounts or payment system accounts for them. It is also necessary to mention that some of the Swiss and Liechtenstein banks also do supports for Estonian projects. Of course not all of them, there are for now about 15 to 20 crypto-friendly banks. Like 80% of them still prefer to work with Swiss and Liechtenstein companies, because they understand the regulation. There are still banks that welcome projects from other jurisdictions, especially from other European jurisdictions. But also some of them work with companies from Singapore. 

Of course, I would like to add that I think that Estonia and Lichtenstein could be really complimentary for a lot of projects, not only in terms of opening bank accounts but also for a lot of projects to test the business model. They need to start with not really simple requirements but with lower budgets, and that is what Estonia can offer. But then when it is already advanced they have to go to some other jurisdictions like Switzerland or Liechtenstein. And since Lichtenstein finally has adopted the Lichtenstein Blockchain Act that has similar licenses that Estonia does, I can say that for some of the developed or advanced projects that have already tested the business model in Estonia Lichtenstein could be a good location, I guess.

A: Yes, and we are already working with the clients who have established their company in Estonia at first and after this moved to another jurisdiction. And why is it important to find the right jurisdiction for your project and what is the main aspect that you need to pay attention to? You need to understand where mainly your clients will be. And according to this, you should make your decision. If your clients are from Germany, Switzerland and Lichtenstein, then it will be for sure more suitable jurisdiction for your project. If you are oriented more to other parts of Northern Europe, then Estonia can be an option. 

And if we are talking about the advantages of Estonia, then for sure we are talking about the possibility of obtaining a residency. This is an absolutely unique opportunity to manage your company from all over the world. So you will get the identity card which makes it possible for you to be identified as a private person. And you will get access to all government services as an Estonian citizen. So you can establish the company through the business register, you can obtain for the license, you can fill tax reports, you can stamp up the documents, you can open bank accounts. So it gives you a lot of opportunities and it makes the company management more simplified for the members of the board who are not local but are abroad. So yes, it is an absolutely unique possibility. And in many cases, we’ve heard it was the main reason why companies decide to come to Estonia – not only for the regulation, not only for the IT services we have at a high level but also in order to make the management more simplified and transparent.

Y: Sure, sure absolutely it seems to be the competitive advantage of Estonia. And we are really happy you’ve shared it with us. Thanks a lot for your time!

A: Thank you so much!

Y: Thank you!

We will be happy to support your DLT/blockchain projects in Liechtenstein and beyond.

Open for your questions and comments. → blockchain@rpl.li

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