Estonia cryptocurrency license is one of the most popular cryptocurrency licenses in the world due to its reputation and strict regulatory environment which both help to attest to the credibility of the license. It is also fairly easy to set up a cryptocurrency company in Estonia due to the straightforward registration procedures and the country’s favourable business landscape. As such, many cryptocurrency companies tend to choose to apply for a license in Estonia instead of other jurisdictions, especially if they are seeking to expand their services to the European Union (EU) market. This article summarizes the benefits of getting a cryptocurrency license in Estonia.
1. Attractive tax regime
In Estonia, the standard corporate income tax rate is 20%. Resident companies are taxed on worldwide profits while non-resident companies are taxed on profits sourced from business activities in Estonia. However, corporate tax in Estonia is only levied on distributed profit. This means that taxation of a company’s profit will only occur when the profits have been distributed as dividends or other types of reimbursements. Thus, this allows company to re-invest profits into machinery and equipment to improve the efficiency of their business model and the quality of their products, while reducing their tax burden.
2. Well-regulated cryptocurrency environment
Estonia has a well-established regulatory framework administered by the Financial Intelligence Unit (FIU) to ensure the transparency of cryptocurrency companies in Estonia. This framework requires companies to frequently report large or suspicious transactions to the FIU and comply with AML/CFT standards in the country. The FIU will also conduct strict KYC checks of board members and make sure that cryptocurrency businesses in Estonia meet the requirements for local substances. This allows cryptocurrency license holders to conduct their business in a safe and regulated environment. Since customers know that Estonia cryptocurrency companies are regulated and monitored strictly by the FIU, this will increase their trust in a company that holds an Estonia cryptocurrency license. Hence, applying for a cryptocurrency license in Estonia is beneficial as the license can serve as a testament to the credibility of your company pgslot, hence encouraging more customers to user your service.
3. Ease of application
Unlike many jurisdictions, it is not mandatory to appoint a local resident director in an Estonia company. In other words, there is no nationality or residency requirements for directors in your Estonia company. Hence, you do not have to employ nominee director services to set up your Estonia company. This minimises the risk of dilution of power caused by hiring a nominee non-executive director from a service provider. Moreover, you can easily register your Estonia company online by applying for e-residency and registering through the Estonian Company Registration Portal. However, you may be required to meet the Estonian FIU for a face-to-face interview when you apply for the cryptocurrency license.
Applying for a cryptocurrency license with the Estonian Ministry of Economic Affairs and Communications is a relatively straightforward process once you have drafted the necessary documents such as the AML/CFT procedures and the company internal regulations for handling cryptocurrencies. It may take up to 2-4 months to register a cryptocurrency license in Estonia, which is typical for cryptocurrency license application across the world.
4. Convenience of one all-encompassing license
In Estonia, there is only one cryptocurrency license which you need to apply for if you company deals with cryptocurrency. As of 2020, all cryptocurrency companies in Estonia only need to apply for the Virtual Currency Service Provider license, which will cover almost all services related to cryptocurrency. Services covered includes the generation and storage of encrypted customer keys, as well as the coin exchange login of fiat currency for cryptocurrency, cryptocurrency for fiat money, or cryptocurrency for another cryptocurrency. This makes it very convenient for cryptocurrency businesses because they do not need to apply for another license even if they decide to provide additional cryptocurrency services that they previously did not provide.
5. Strong IT sector
Estonia is the most digital advanced society in the world where almost all government services can be accessed via online platforms. This has reduced unnecessary bureaucracy by allowing businesses to apply for grants and register for government services more smoothly and swiftly. Individuals living and working in Estonia can also enjoy the widespread cashless payment culture, wide variety of online services available and the quick Internet speed in the country. Since Estonia declared Internet access as a fundamental human right in 2000, it has been launching schemes and training programmes to improve the computer and IT skills of local residents. Through such exposure, many Estonian citizens have become fairly tech-savvy and they are generally equipped with programming or other computer skills. Thus, setting up a business in Estonia will allow your cryptocurrency company to gain access to this pool of skilled labour.
6. Favourable business landscape
Estonia has a conducive business environment, and the government actively implements policies to encourage investment and the relocation of foreign talent into Estonia. In fact, the e-residency programme was introduced to make it easier for talented foreign expatriates to work in Estonia. This would facilitate the transfer of skills and knowledge from experienced foreign talent to local workers. In addition, Estonia has many incubators and accelerators to facilitate the growth of start-ups. Entrepreneurs are also given monetary incentives to help them manage their business.
7. Access to EU market
Since Estonia is a member of the EU, a cryptocurrency license issued in Estonia can also be used in other countries in the EU. Hence, applying for a cryptocurrency license in Estonia gives your business access to the large EU market. This will lower the administrative cost of your business as you will not need to apply for a separate license to operate in another country in the EU.
Conclusion
As one of the most digitally advanced countries in the world, Estonia is very attractive for foreign cryptocurrency companies. Since most government services can be accessed online, it is easy for a foreign company with an Estonia cryptocurrency license to operate outside of Estonia. Although the introduction of stricter regulations in the recent years have made it more difficult for companies to apply for a cryptocurrency license in Estonia, it has also served to improve the credibility of cryptocurrency companies in Estonia by minimising the risk of money laundering and illegal business activities.