The cost of obtaining a license to exchange cryptocurrencies

Today, there are a huge number of crypto organizations, and their number continues to grow. If you also want to open such a company, you need to know the crypto license cost in advance and understand what costs you may face. There are a huge number of factors to consider, and now, we want to discuss just a few of them.

Why did we decide to consider obtaining a crypto license using the example of Estonia?

Estonia is one of the few countries that regulate the license for cryptocurrencies, particularly for the activities of organizations that trade them. Its legislation is constantly trying to keep up with changing market trends. It only strengthens its image as the most technologically advanced country in Europe.

Estonia has a clear and friendly tax policy in which cryptocurrencies are not subject to any particular tax, such as VAT or PCC tax. The absence of restrictions on investments in virtual currencies, legal regulations, and low operating costs make Estonia a great place to do business related to cryptocurrencies, and licenses for cryptocurrencies in Estonia are more affordable.

Find below the requirements for a cryptocurrency license in Estonia and when you can get one.

Provision of cryptocurrency services in Estonia

The Estonian cryptocurrency license allows the company to operate trading platforms where virtual currency can be exchanged for fiat or virtual cash for another virtual currency. In addition, this type of Estonian cryptocurrency license entitles the company to provide a service that generates keys for customers or stores encrypted customer keys that can be used to store and transfer virtual currencies.

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Requirements for trading crypto assets in Estonia

The implementation of a crypto license in Estonia requires the participation of an authorized advisor in Estonia. To obtain a permit, the company must:

  • Be with the status of an Estonian company registered in the Estonian Register of Entrepreneurs.
  • Be with a fully paid share capital of 12,000 euros.
  • Have documentation of a physical office in Estonia and doing business in Estonia.
  • Provide each member of the board of the company with the status of an Estonian resident.
  • Have to prove that all related persons (e.g., board members, shareholders) have never been punished for a crime, particularly against public authorities or for a crime related to money laundering. To do this, the company must provide a certificate of good conduct for each named person and a resume. In addition, a member of the board of the company must be a resident of Estonia, have a good reputation, and provide a list of his duties related to his position.
  • Describe the planned activity and send the address of the company’s website.
  • Create a payment account in the European Union.

In addition, the most challenging requirement for obtaining a cryptocurrency trading license in Estonia is the preparation of internal rules for AML and KYC procedures. As a law firm, we offer professional training and implementation of these procedures.

Due to the obligation to have a physical office in Estonia and the status of an Estonian resident by members of the board of a company licensed to trade cryptocurrencies in Estonia, we offer additional services in this area to fulfill all these requirements.

How long does it take to get a cryptocurrency license in Estonia?

The company will receive the decision of the Estonian Financial Inspectorate (FIU) within 60 working days from the date of submission of the complex application. It should be noted that during this time, the FIU may request additional information regarding the application for a license to trade in cryptocurrencies.

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By the decision of the FIU, the period may be extended up to 120 days.

Taxation

Except for a few additional reporting requirements, companies that hold a cryptocurrency license in Estonia are not required to file additional reporting with the tax authorities. The standard rules of the company govern the accounting records of such a company.

Cryptocurrencies and income tax

Cryptocurrencies are available only in the virtual world, listed on the stock exchange, such as Bitcoin, Litecoin, Ethereum, Ripple, or Dash. Cryptocurrency trading as part of a business should be classified under PKD code 64.19.Z. Other monetary intermediation.

Cryptocurrency mining is not subject to income tax. An entrepreneur must pay tax only on purchase and sale transactions (exchange cryptocurrency for a traditional currency, i.e., zlotys, euros, dollars, etc.). In addition, at the end of 2018, tax clarifications appeared indicating the obligation to tax every exchange deal. It means that exchanging one cryptocurrency for another virtual currency, goods, or service must also be considered. We consider such conversion as a form of paid alienation of this cryptocurrency. The tax base must be expressed in PLN.

Income from economic activities arises on the day the property is sold, i.e., the day of the sale or exchange, but no later than the day the invoice is issued, or the amount due is paid. The amounts owing are considered the entrepreneur’s income, even if they are not received.

Registering a company in Estonia – step by step

When registering a company in Estonia, certain steps must be followed, whether we do it remotely or locally. We will assist in the effective registration of a company, including the passage of the above procedures, namely:

  • checking the presence of the company name;
  • determination of the composition of the board;
  • identification of these partners;
  • determination of the share capital (min. 2,500 euros);
  • determination of how many shares and by which shareholders will be acquired;
  • description of the company’s business, etc.
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Then you should prepare an application and additional documents, based on which the company will be entered in the register.

Main risks

The problem with the tax settlement of the cryptocurrency exchange is that when exchanging one electronic currency for another, it is impossible to determine their value at the time of the transaction accurately.

Virtual exchanges, as a rule, do not provide the technical ability to determine the value of exchanged cryptocurrencies in traditional currency at the time of the exchange operation.

The specifics of the functioning of these exchanges lie in the constant change in the rate of the cryptocurrency, which means that within a minute, the rate of specific electronic money about the traditional currency can change several times. During this time, a cryptocurrency on a particular exchange can earn or lose even the equivalent of several or several tens of dollars or euros in an instant.

Services of our company

Obtaining a work permit is a rather complicated process, which you can only do with the help of specialized specialists. Our company employs specialized lawyers who will tell you how much it costs to obtain a license, help you draw up the necessary documents, and tell you what you need to pay attention to.

They can take care of all the hassle of getting a crypto work permit. You can issue a power of attorney for our specialists, and then they will be able to represent your interests in government agencies and banks. 

High-quality promotion of sites in the cryptoindustry team and apply to them for help you can on this site

Author: samanvya

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