Bringing Cryptocurrency Companies in Estonia into Line with Amendments in the Laws of the Republic of Estonia – Guide

For Holders of Licenses for Exchange Operations with Cryptocurrency/Crypto Wallets

  • Amendments for cryptocurrency companies in Estonia in legislative acts were approved by the President of Estonia on 19.12.2019;
  • Amendments entered into force on 10.03.2020;
  • License holders have time, until 01.07.2020, to bring companies into line with the new regulations.

More details about amendments in law can be found on our website, English translation and a link to the original version of the new Act are available here – https://www.pfser.com/en/uncategorized/change-law-affecting-cryptocompanies-estonia/

  1. The size of authorized share capital of the company

According to the new law, authorized/share capital of companies holding a license/licenses, must be at least 12 000 EUR and must be paid in full amount.

  1. Name of licenses

Starting from the 10th of March 2020, licenses for exchanging a virtual currency against a fiat currency and providing a virtual currency wallet service are changing their name and are transforming into one – providing a virtual currency service license.

According to the new law, virtual currency service license includes the following:

– Virtual currency exchange service – means a service with the help of which a person exchanges a virtual currency against a fiat currency or a fiat currency against a virtual currency or a virtual currency against another virtual currency;

– Virtual currency wallet service – means a service in the framework of which keys are generated for customers or customers’ encrypted keys are kept, which can be used for the purpose of keeping, storing and transferring virtual currencies;

  1. The company has an account within the European Economic Area

According to the amendments, the company must have a current account within the European Economic Area. Details of this account must be provided to the supervisory authority.

  1. Location of business – Estonia, location of management – Estonia

The business activity of the company must be carried out from Estonia, one of the members of the management board must be located in Estonia on permanent basis. More detailed comments can be found below.

The registered seat, the seat of the management board and place of business of the undertaking applying for authorisation in the field of activity specified in clause 4 of subsection 1 of § 70 of this Act is in Estonia or a foreign company operates in Estonia via a branch that is registered in the commercial register and the place of business and the seat of the head of which is Estonia;”

  1. Bringing the procedure rules into line with the new amendments

Due to amendments in the regulations, the procedure and AML rules must be revised accordingly to the new amendments, the new edition must be approved by the management board and the person responsible for AML/KYC procedures.

Step 1 (Authorized share capital)

In order to increase the authorized share capital, the company must have a current account.

In case if the company has a contributed authorized share capital in the amount of 2500 EUR.

The shareholder/shareholders of the company must deposit 9500 EUR to the company’s current account with a special mark.

In case if the company does not have a contributed authorized capital.

The shareholder/shareholders of the company must deposit 12 000 EUR to the company’s current account with a special mark.
After that it is required to obtain an official certificate of capital contribution in English with the seal and the payment/credit institution employee’s signature. Further, this certificate can be sent to us to make all necessary changes in business registry and in articles of association. Those funds then can be used by the company at its discretion. Timeframes for applying those changes – 5-8 business days after we receive a certificate and a notarized power of attorney in the original.

Step 2 (Company’s current account within the European Economic Area)

In case if you still have not opened a current account for your company, you can contact our specialists for opening.

  • The cost of opening a current account for a crypto company in payment institution within the European Economic Area starts from 1500 EUR.

Timeframes for opening an account – from 7 business days (depends on the payment institution).

Step 3 (Name of the licenses and amendments to the procedure and AML rules)

We will prepare and send you a new procedure and AML rules form and an application for the license name change. You will need to sign and send these forms by mail, after that they will be submitted to the supervisory authority. After the review, the license/licenses will be converted into one, changes will occur on MTR website.

Step 4 (Location of business/location of the management board)

Currently we strongly recommend to apply for e-Residency if you do not have one. In case if you would like to meet the requirements now, we are ready to assist you with finding an office and a local employee for the position in the company’s member board. For more detailed information, please contact our specialists.

Responsibility for cryptocurrency companies in Estonia

In case if a company that has one of the existing licenses does not bring the company into the line with those requirements, the licenses will be revoked without the right of restoration.

In case if the company is no longer needed

If you do not plan to carry out further activities for this company and would like to avoid any additional expenses/incidents/consequences in the future – we strongly recommend dissolving/liquidating the company.

Every case should be reviewed individually. Please contact our specialists to get free consultation.