ESTONIAN VIRTUAL ASSET SERVICE PROVIDER (VASP) LICENSE

 

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Estonia is one of the most popular jurisdictions for virtual currency services providers due to the straight forward regulation, short deadlines and good value for money. We have helped our client to obtain over 400 licenses, and counting. We also continue to provide ongoing compliance support.

On the basis of § 70 subsection 1 point 4 of the Act on the Prevention of Money Laundering and Terrorist Financing (RahaPTS), an entrepreneur must have an operating license to offer a virtual currency service.

The virtual currency service provider license covers:

• The virtual currency wallet service is a service within the framework of which customers' encrypted keys are created or stored, which can be used for the purpose of keeping, storing and transferring virtual currencies (RahaPTS § 3 p. 10).

• Virtual currency exchange service is a service in which a person exchanges virtual currency for money or money for virtual currency or one virtual currency for another (RahaPTS § 3 p. 101).

• The purpose of the virtual currency transfer service is to transfer virtual currency from one customer to another. This means that the person does not provide a wallet service or an exchange service, but mediates the movement of virtual currency from one person to another. As part of the transfer service, the virtual currency service provider makes a transaction on behalf of a natural or legal person, within the framework of which the virtual currency moves from one virtual currency wallet or one account to another. The service includes all services that allow the person using the service to transfer ownership, possession, control over the virtual currency or the opportunity to benefit from the virtual currency to other persons (RahaPTS § 3 p. 102).

• Virtual Currency Issuance or ICO – Virtual currency can be issued and/or transferred using distributed ledger or blockchain technology. One mechanism for distributing such assets is an event commonly called an ICO (initial coin offering). In an ICO, an issuer or promoter typically offers a virtual currency for sale in exchange for cash or another virtual currency. An ICO can be about raising money to carry out some project. During the offering, the issuers or other persons related to the ICO may promise the buyers of the virtual currency the opportunity to earn income from the change in the price of the virtual currency or the execution of the project. After they are issued, the virtual currency may be resold on the secondary market (RahaPTS p 103). Since certain types of ICOs may be operating as an investment company or brokering loan products, the company may need an operating license issued by the Financial Supervision Authority when offering such services. In the case of such services, please contact the Financial Supervision Authority to apply for an activity license or to assess the need for an activity license.
  The operating license for offering virtual currency service is not transferable to another person (RahaPTS § 70 paragraph 41).

The operating licences are issued by the Estonian Financial Intelligence Unit (FIU).

 

The company is qualified as a Financial Institution, but has no special reporting requirements to tax authorities. Accounting must be done like for any other company. No special reporting to the regulator is needed, but FIU can always make precepts and inquiries about the company’s activities. You may find Financial Intelligence Unit’s advisory guidelines here.

 

Required documents:

 

1. Police clearance certificate for all related persons (shareholders, board members, ultimate beneficiary owners, AML officer, local director);

2. Certified passport copies of all above mentioned persons;

3. CV-s of management and AML officer, proof of impeccable reputation;

4. Description of planned activities,  business plan;

5. AML Rules of Procedure of the company, in Estonian;

6. Office lease agreement;

7. Bank/EMI account statement for the Estonian company and related users;

8. Share capital payment confirmation;

9. Description of the IT systems;

10. Financial documentation, proof of funds, source of funds;

11. Description of the business model, business plan, in Estonian;

12. As a rule all KYC/police clearance documents must be in English (or Russian) and certified with an apostille. These documents may not be older than 3 month.

 

Process:

 

To apply for the above mentioned license, it must be done via a company registered in Estonia or through a registered branch office of a foreign company in Estonia. As a rule, we suggest to use a local company not a branch office, as branch registration is clearly a more complicated task.

 

When a local company is registered and all required documents collected, you will pay the state fee and we will assist you with application for the license.

 

During  the licence application process we also assist in current matters, as authorities often have additional questions or they need some clarifications.

 

Company registration:

 

Once we have obtained all the initial information from you, it takes usually about 1-2 days to create the company.

 

In case you want to start a company remotely (without visiting Estonia) - it usually takes 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 all the required information and documents mentioned above from you, we can do the rest of the job and apply for the license.

The process of an application:

 

Once all the necessary documents have been drafted and gathered, the application for activity licence shall be submitted through the Estonian Registry of Economic Activities. The application will be processed by the Financial Intelligence Unit (FIU) by granting or refusing to grant the activity licence within 60-120 days as of the date of submission of the application.

During its evaluation, the FIU may call in the AML compliance officer or the board member of the company for an  interview to assess the person’s suitability to carry out the obligations of the MLRO/board member.

Once granted, all the organization’s licenses are publicly available in the Estonian Registry of Economic Activities. There are no separate certificates issued to the licensed company. A digital copy of the license may be obtained from the Registry.

The company is obligated to start providing its services within 6 months of receiving the license.

Additionally we assist with the required compliance matters:

• Crypto licensing documentation, AML/CTF policies

• Recruiting services

• Setting up a local office

• Assisting with opening IBAN account & share capital contribution