Crypto Exchange License in Estonia

Operating in the crypto market involves various challenges that require a vast understanding of dynamic market changes, regulatory reforms and the significant speculative nature of most assets, making it the most volatile market.
The first step in launching your crypto business is acquiring a license allowing you to carry out custodial or conversion functions between crypto and fiat currencies. A few countries emerged as the source of exchange licensing, such as Estonia, Malta, Gibraltar, Lithuania, Malaysia and others.
Crypto exchange license in Estonia is the frontrunner of decentralised platforms and providers that offer custodial and exchanging services. The framework offers detailed guidelines on the required documentation and steps to obtain a crypto license. Let’s review what you need to know to become a licensed crypto exchange.

Key Takeaways

1. Estonia offers one of the most crypto-friendly environments for crypto exchanges and wallet providers.
2. Licensed crypto exchanges in Estonia are not subject to corporate tax or double taxation.
3. Estonia’s license for crypto companies allows entities to operate as a crypto-fiat-crypto exchange platform or a wallet service provider.
4. Other countries, such as Lithuania, Hong Kong, Malaysia and Dubai, offer a competitive environment for crypto exchange companies, with a lenient tax system and boosted procedures.

Understanding Crypto Exchange License

The regulations for crypto payments and exchange platforms change frequently. Some countries are becoming more lenient for crypto services, while others impose strict rules on storing and trading virtual currencies.
Additionally, market prices for most cryptocurrencies change rapidly, especially during market bull runs or bearish sentiments that drive traders’ activities and affect dealing desks and exchange platforms.
Therefore, obtaining a crypto exchange license in Estonia allows you to legally carry out a crypto-related business and stand out from the huge number of service providers by being a legitimate operator that abides by clear-cut regulations and frameworks.
Not only does a license attract more clients who prefer working with a legal entity, but it also provides backing when unexpected market events prevail or the regulatory landscape changes.

How to Get Estonia Cryptocurrency Exchange License

Estonia is a common destination for crypto exchange platforms aiming to capitalise on the growing market trends and the increasing number of crypto investors and traders. In 2017, Estonia passed a law that allows entities to apply for a business permit to operate as a crypto-fiat exchange service or a decentralised wallet provider.
The regulations impose strict guidelines for companies that engage in exchanging cryptocurrencies with fiat money, with thorough KYC and AML protocols to mitigate money laundering and avoid accommodating financial criminals.
Once an operator gets an Estonian permit, they can legally offer cryptocurrency exchanges and wallet services to clients in Europe.
The process of getting the permit can extend up to six months and requires a deposit of €10,000 as an application fee to the Estonian Ministry of Finance. Additionally, the application also requires owning €100,000 as a starting capital with a physical office, local working force and internal auditing.
In 2022, the legislation updated the crypto exchange guidelines, adding more requirements for registering new investors, obligating them to process and verify the user’s name, ID number, date and place of birth and proof of the used payment method, whether a virtual wallet or a physical credit/debit card.