New licensing regime for cryptocurrency related businesses

On 10 March 2020, amendments to the Money Laundering and Terrorist Financing Prevention Act entered into force, bringing changes to the licensing regime of cryptoexchanges and e-wallet providers.

This makes Estonia a unique EU jurisdiction, not expanding the strict regulatory regime of conventional financial institutions to cryptocurrency-related enterprises, operating in the territory of Estonia.

The main change is the authorisation requirement. It applies to any virtual currency service, including:

• virtual currency e-wallet service (keeping encrypted keys for the customers)

• virtual currency exchange service (enabling the customers to exchange fiat and virtual currencies).

The minimum capital of a company providing virtual currency services is EUR 12,000 and must be paid by 1 July 2020 (in cash only). The Financial Intelligence Unit (RAB) will be making a background check of the members of the board of directors, including the reputation issues.

To provide virtual currency services in the territory of Estonia, a company must be incorporated in Estonia or establish a branch registered in the Estonian commercial register.

The amendments also extend the AML requirements to financial institutions that provide virtual currency services.

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