According to the Money Laundering and Terrorist Financing Prevention Act of Estonia (MLTFPA), there are two licensed activities in the cryptocurrency related field such as:
- providers of a service of exchanging a virtual currency against a fiat currency; or
- providers of a virtual currency wallet service.
Bitcoin, Ethereum and other cryptocurrencies fall under the definition of virtual currency pursuant to the MLTFPA. Virtual currency wallet service means a service in the framework of which keys are generated for customers or customers’ encrypted keys are kept, which can be used for the purpose of keeping, storing and transferring virtual currencies.
There are separate licenses for each activity performed. If a company provides both the exchange service and the custodian virtual currency wallet service, then two licensed are required. These licenses are granted by the Estonian Financial Intelligence Unit (FIU) that is part of the Police and Border Guard Board.
Foreign companies may apply for the FIU licenses without the obligation to incorporate in Estonia.
Companies holding cryptocurrency licenses will have to:
- Develop the internal anti-money laundering rules of procedure
- Undertake KYC of their customers; and
- Monitoring the business relationship of the customers.
*There is a draft law in the parliament with stricter
requirements, e.g. a licensed company will need to have a physical presence in
Estonia, higher state fee (3300 EUR) etc. We will keep you updated about the