Enabling you to operate a crypto business in Estonia
Cryptocurrency (VASP) Licence,
Introduction to obtaining the cryptocurrency licence in Estonia
If you wish to provide cryptocurrency services in Estonia, you must register with the Financial Supervision Authority (EFSA) as a Virtual Asset Service Provider (VASP). The previous regulator was the Financial Intelligence Unit (FIU).
The regime for cryptocurrency licencing in Estonia is changing. All existing virtual currency service providers licenced by the Financial Intelligence Unit will have to ensure compliance with the new requirements by 1 October 2021, set by the new financial regulator, namely the Financial Supervision Authority (ESFA).
Current requirements for the cryptocurrency (VASP) virtual currency service providers in Estonia
Below is a list of the requirements to register as a cryptocurrency virtual currency service provider under the current laws:
the company’s share capital must be at least EUR 12,000;
the registered office of the company, the seat of the management board and the place of business must be in Estonia
the management board must be of good repute;
the company must appoint a compliance officer who works permanently in Estonia and has the appropriate level of skills, knowledge and experience to perform the role of a compliance officer;
internal procedures with regard to AML and KYC;
the company; members of its management body; and its beneficial owner(s) must be fit and proper; and,
the company must have a client account with a credit institution (bank), an electronic money institution or a payment institution established in Estonia.
New requirements for virtual currency service (VASP) providers
Under the new requirements, service providers must have/provide, among other things, the following:
the minimum share capital of at least EUR 25,000, or a quarter of the previous year’s fixed costs;
a registered physical office and head office located in Estonia;
the management board must have an impeccable business reputation, be fit and proper, and have knowledge, skills and experience;
the management board must consist of at least two people;
a business plan;
financial forecasts, including your balance sheet and statement of income, expenses, profits, losses and cash flows;
internal rules relating to the requirements of Estonian legislation;
details of your internal accounting policy and procedures;
details of your information technology systems, including a description of your security measures;
security policy and information on ensuring the security of your payments;
internal control rules and rules of procedure relating to the prevention of money laundering and terrorist financing;
a description of your organisational structure (organisational hierarchy chart);
details of each of your shareholder(s);
details of the key people e.g. managers, within your firm;
details of your auditor and internal audit arrangements; and,
certification of your own funds.
Application fee for the cryptocurrency (VASP) virtual currency licence in Estonia
The current application fee payable is EUR 3,300. Under the new regime, the application fee will be reduced to EUR 1,000.
Timeframe to obtain the cryptocurrency (VASP) virtual currency licence in Estonia
The EFSA must process all new applications within 3 months of receipt of all required documents if the application is complete with all the required documents submitted. Where this is not the case, it can take up to 6 months.
How we can help set up your crypto business in Estonia
Buckingham Capital Consulting can advise you on the most appropriate and suitable licence, based on your business model and plans. We can prepare, manage and obtain your licence in the country of your choice and help you understand your regulatory and legal obligations.
Our service involves the following:
- Guiding you through the application preparation stage
- Managing the entire application from planning to obtaining the licence
- Preparing, completing and submitting the application form
- Submitting the individual directorship forms
- Submitting your application to the financial regulator
- Assisting you with any correspondence/further questions from the financial regulator after submitting your application until your licence has been granted.
Choosing the right consulting partner
1. Expertise and Specialism in Banking, Payments and E-money
Banking, e-money and payment services are specialist fields, requiring prior expertise, knowledge and a specialist focus. You should ensure that your consultant specialises in this area as opposed to generalising in it. They should be comfortable explaining the technical aspects of this field, such as providing technical and regulatory requirements for licence authorisation. The financial regulator will have conditions and expectations regarding different aspects of the application. For example, shareholders and management should be fit & proper, of good repute and have relevant experience and knowledge. A good consultant should be able to advise you on the regulatory requirements early on in order to manage your time effectively and minimise any delays or wrong decisions. It should be your consultant’s role to guide and advise you on best practices and regulatory requirements. For example, we spend time advising clients from an early stage, in fact during the initial meeting and prior to taking on their application, of such requirements so that they are able to make an informed decision before investing their time.
2. Ability to access banking products and services
Setting up an e-money, payment or banking fintech goes beyond the scope of obtaining a licence. You will require specialist banking facilities, such as client safeguarding accounts, and access to payment systems, such as SEPA and Swift. Furthermore, you will require systems and software to manage your business. It is therefore important that your consulting partner has a strong network of connections with banks, technology partners and regulators. For example, by working closely with partners, such as Visa, Mastercard, Wirecard, and central banks, we are able to help clients by arranging banking facilities, such as safeguarding accounts, issuing cards, and access to payment infrastructures, such as SWIFT and SEPA.
Communication between a consultant and their client is extremely important. They should be open to meeting with you if required or to discuss your project during an initial meeting and thereafter have regular conversations with their clients. For example, we have at least a weekly telephone or conference call with our clients to discuss the progress of their licence authorisation application or related project. This helps the client to understand the progress of their application and be able to report key information and developments to their management team or board. At the same time, it enables us to understand how the client is coming along in developing the operational aspect of their business.
4. International approach
Banking, electronic money and payment services are international in their very nature. As our clients grow internationally their needs change. Firms, therefore, require licences, banking facilities, infrastructure and partners in international markets. We often find firms working with multiple legal, accounting and related firms. This can be challenging for such firms and often slows down their international growth. Furthermore, firms then must work with multiple partners within each country to manage different requirements e.g. company formation, accounting, legal, systems & IT, banks, and software vendors. This is further problematic when entering new markets. To manage these problems, our services are offered on an international level with offices strategically located in key jurisdictions across Europe and Asia. Our clients enjoy one point of contact for all their national and international requirements. This helps to remove any language barriers which they would otherwise face. Our services include accounting, legal, administration and banking, which means that our clients can centralise their requirements with us.
5. Prior authorisation applications experience and success rate
Firms should ensure that their consulting partner has good knowledge and experience in banking, e-money and payment services. They should be able to demonstrate strong knowledge and experience within this area and be comfortable with explaining the legal and regulatory framework concerning banking, payment services, and electronic money. Your consulting partner should be able to share a client reference or provide client testimonials for similar past successful projects. For example, our website provides details of our recent work as well as the names of some of our clients.
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What our clients say
"Buckingham Capital Consulting has been a reliable and trusted partner. They spent time understanding our business, people and processes and worked closely with us throughout the process. They completed our licencing application to a high standard and in a timely and efficient manner. We were delighted with how smooth the entire process was from the application preparation and submission but also with the case officer at the FCA. Buckingham Capital Consulting ensured that our licence was obtained in an efficient and smooth manner. The value and expertise they provide became obvious early on in the process. We highly recommend Buckingham Capital Consulting."