Why You Should Get Your Crypto License in Estonia
Estonia is known globally for its head-on approach to innovation, digitalization, and cyber security. Since the invention of blockchain technology, the Estonian government and local entrepreneurs have been one of the pioneers in utilizing it. This has led to the point where you can incorporate a business and obtain a crypto license in Estonia. Having a license enables you to offer virtual currency services legally in Estonia while managing your business locally or from abroad.
3 Reasons Why You Should License Your Crypto Business in Estonia
Compared to other favorable jurisdictions like Malta, Japan, Switzerland, or Singapore, which are popular among entrepreneurs to establish a business that deals with virtual currencies, Estonia may have a couple of advantages.
1. Fair and innovative legal framework
Estonia was one of the first countries in the world to start regulating the virtual currencies industry. Since 2017, the Estonian Money Laundering and Terrorist Financing Prevention Act defined that virtual currency exchange providers and custodial wallet services require authorization from the government. This means that a financial license must be acquired before you can provide such services. Making the industry more transparent and having legal a set of legal requirements helps guide businesses in the right direction. Also, it helps customers to have more peace of mind while using such services, knowing that the company is being supervised and has met the legal requirements.
Virtual currencies are treated as property in Estonia. This means that some businesses can be established by making the share capital contribution with Bitcoins and Altcoins as a non-monetary contribution. This is very innovative and increases flexibility when assets are already as virtual currencies.
Estonia is one of the handful of countries in world, which is open to international entrepreneurs remotely. Anyone who wishes to establish a business in the world’s most digitally advanced nation can do so. Obtaining the e-Residency card is easy and it enables foreigners to access all Estonian e-Services which are offered by the government. The card is also useful for signing documents digitally and remotely. By being an e-Resident, you will save time and money which would be spent on bureaucracy while starting and managing a business.
3. Favorable tax policy
In 2021, Estonia was selected as the most competitive tax environment among the OECD countries and this for the eighth year in a row. This is mostly due to low tax burdens, and especially the fact that reinvestment of business profits are not taxed.
Furthermore, in Estonia, crypto assets are exempt from VAT and are treated the same way as property per the Estonian Income Tax Act. This means that taxation only applies on gains from the sale or exchange of virtual assets, mining or payments for work performed.
Different Cryptocurrency Licenses in Estonia
A virtual currency is a value presented in a digital form that is digitally transferrable, store or traded and accepted as a means of payment by legal or natural persons. However, it is not a legal tender or financial instrument in any EU country. To provide virtual currency exchange, wallet or transfer services in Estonia, a business must acquire a license from the Financial Intelligence Unit, who oversees businesses operating with virtual currencies.