Key Updates on Estonian Crypto Licensing Process
In the spring this year Estonia changed its crypto regulations.
Like everything in 2020, this as well has been a chaotic and unpredictable process.
How can it be unpredictable, considering, that all requirements are public and written in the law?
Because regulations can be interpreted in different ways. And, not only by us, lawyers and consultants helping out clients. Also, officials within the FIU interpret different requirements in a different way.
And as you can already assume, this has caused a lot of difficulties and confusion among applicants. And some court cases with the Estonian FIU.
It’s rather understandable when there’s a transition from old regulation to new regulation done at a rapid pace. There’s always some confusion. But it’s also an unpleasant experience for applicants. And to us, the advisors.
But I am not here to scare you off and tell that it’s all bad. Actually, we’ve now completed numerous successful license applications under new regulations, and it’s clear what needs to be done. And I want to conclude the main points for you.
How Not To Screw Up Crypto Licensing Process
First, we’ve been successful in licensing our clients because we were clear about the need to do things correctly. The regulations were changed with a purpose – to be able to supervise license holders. And this is what we’ve been communicating to our clients.
From the crypto business point of view, it’s an additional burden. But consider it from the angle of your future client. They are much more ready to use your services knowing that the company handling their precious crypto and fiat is properly supervised. I definitely don’t want to use the services of a bank that has a very low threshold of requirements to operate.
So, what do I mean by “you have to do things correctly”.
Let me ask you – would you be on the board of a crypto company for a few hundred euros per month? Or let me rephrase: would you be willing to assume all the risk of the company activity operating in crypto space and providing financial services?
You probably wouldn’t. And if someone offers you services in that price range, they’re either offering a person who sits on a board of numerous companies (which is a red flag for the FIU) or someone who is incompetent. And if that incompetent person goes to the FIU interview, the card house falls apart.
That’s why it’s extremely important to lay down a good foundation first. Recruit suitable person, who can actually understand legal requirements for crypto business and benefit the company. Who can do the actual work?
Finding and hiring a good and competent person to manage your crypto business here in Estonia is the most important challenge you have to overcome. If you nail that, your application process gets a lot easier.
The second point of conflict with the FIU and the applicants has been the office space. It’s another upkeep cost. And as a result, a place to cut expenses.
However, it’s not fine to rent an office in a distant city next to the Russian border. Or an apartment, where one corner is made for the office.
Yes, it’s possible to argue with the FIU about that as there are no specifications in the law. But do you want to spend months on arguing with the FIU or obtain the crypto license? The difference in cost is a few hundred euros on a monthly basis – we recommend to lease a real office in Tallinn, so you eliminate all potential objections.
And if you check the boxes of the requirements as they have to be done, then the confusion disappears.
The licensing becomes a formality, and you’ll succeed.