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The recent money-laundering scandal at Danske Bank became a starting point for Estonian fiscal authorities and legislators to apply stricter AML policies. Resultingly, more than 400 cryptocurrency companies lost their licenses lately. Considering the latest news of the industry, it is smart to pay extra attention to the new regulatory obligations for entrepreneurs planning to start a cryptocurrency business in Estonia.
For a long time, Estonia was known to have one of the most open approaches towards cryptocurrencies in the EU. This was the reason for the high interest of entrepreneurs from the crypto industry. More than 1300 companies had obtained a cryptocurrency license in Estonia in the course of the last three years.
Right now, there is one issue that concerns the Estonian regulators the most. It is the fact that registered cryptocurrency exchanges might be using their platforms for illegal operations. Consequently, the lawmakers of Estonia decided to tighten control over this industry which led to the complication of the license obtainment process.
More precisely, the financial regulators brought the following changes:
Hereafter, the Estonian government requires an opening of an Estonian branch of a foreign company in order to register a cryptocurrency exchange there. Moreover, the Financial Intelligence Unit – Estonia’s main financial regulator – stated that licenses from some cryptocurrency companies that reside not in Estonia can be annulled.
Despite not being deemed legal tender, cryptoassets in Estonia do have financial value and can be used as a payment instrument. Virtual currencies are viewed as virtual assets and are freed from VAT.
Three years ago, new AML / CFT regulations were introduced in Estonia. According to the new obligations, cryptocurrency exchanges are supposed to obtain these licenses:
Hence, the recent withdrawal of licenses from certain companies is the result of following the new AML / CFT regulation.
Currently, the regulation of cryptocurrencies in Estonia is performed by the example of UK legislation. Just like in the UK, in Estonia cryptocurrencies are not taken as legal tender, though still are legitimate to exchange if registered legally.
If you would like to open your own cryptocurrency in Estonia and need legal advice about all the requirements in the country, do not hesitate to contact specialists from COREDO. Our experts will explain to you the whole process including going over the license application step by step.