Cryptocurrency and ICO - regulation and legislation in Estonia

September 26, 2018

Not long ago Estonia was considered the best place for carrying out ICO-s and engaging in other crypto activities. Cryptocurrency boom seems to have softened a little as the sector in general has seen massive sell-offs but it would be short-sighted to say “crypto is dead” yet. So what does the Estonian legislation and regulation say about cryptocurrency exchanges and ICOs.

 

As the supervising body, the Estonian Financial Inspection has published guidelines to navigate through the rather complex situation that lack precise rules in the law. Regarding initial coin offerings or ICOs, we recommend to familiarize yourself with the guidelines found here:

 

https://www.fi.ee/index.php?id=22715

 

So everything comes down to whether the coins or tokens can be considered as securities or not.

 

What is regulated more precisely and clearly are the 2 licenses in the cryptocurrency sphere that are issued by the Financial Intelligence Unit. These are for:

 

  1. Providers of a service of exchanging a virtual currency against a fiat currency;
  2. Providers of a virtual currency wallet service.

If the founders and/or board members of the company applying for these licenses are not Estonians, there are some requirements to consider before applying.

 

With the application, you should present an original certificate of the criminal records database or an equal document issued by a competent judicial or administrative body of its country of origin, which certifies the absence of a penalty for an offence against the authority of the state or a money laundering offence or another wilfully committed criminal offence and has been issued no more than three months ago and has been authenticated by a notary or certified in accordance with an equivalent procedure and legalised or certified with a certificate replacing legalisation (apostille), unless otherwise provided by an international agreement.

 

Also, bear in mind that the company has to have rules of procedure and internal control rules regarding anti money laundering (can be in English) and also nominate a contact person for the Financial Intelligence Unit. That person has to speak Estonian and also be able to identify any potential breaches of the anti money laundering legislation and then be able to communicate with the Financial Intelligence Unit.

 

Additionally the company of course needs a virtual office and a contact person in Estonia (if the residence of the board member(s) is not in Estonia). Also be ready to present your CV and describe your future business, potential clients etc.

 

If you need help with any of the above, feel free to contact us. We have experience in applying for the licenses and also providing different contact person services.

 

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