Recently, there have been discussions regarding Estonia’s new law on cryptocurrency, the revocation of 500 crypto licenses in Estonia, and companies exiting from Estonian regulatory jurisdiction. Let’s focus on three major recommendations.
Do your research before engaging with a legal partner in Estonia
Yes, it might sound odd, but I think one of the reasons why companies have been losing their crypto licenses is some consulting companies. I won’t mention specific firms, but I am aware that some consulting companies conduct very aggressive marketing, spamming their adverts for a single reason — to sell a “ready company” with licenses and, in some cases, with a bank account.
Why are they to blame? First, they spam and try to sell their services to everyone who is working in the cryptocurrency business, which I feel isn’t appropriate. Estonian licenses are for very specific services and may not be applicable to everyone who works in the crypto industry. I have personally met people who bought a “ready company” from one of those consulting companies. When figuring out their business model, I came to the conclusion that they did not really need them.
Second, a bank account, which was opened for a company before the sale, will most likely be suspended or blocked from operating normally when a buyer starts changing the shareholders and directors. In Estonia, banks are very conservative and they usually do not work with crypto business and non-Estonian residents, especially when the company cannot prove the direct connection to Estonian jurisdiction. Having an Estonian company is not enough.
My recommendation is to “do your own research” when selecting your legal partner in Estonia. Try to avoid consulting companies that spam you or employ aggressive marketing tactics. Usually, they do not have time to thoroughly analyze your business model to understand what you really need. Their aim is solely to sell you the licenses and other services.
There are also some consulting companies operating or located outside of Estonia — e.g., in Russia, Israel, etc. Such companies are unfamiliar with the local jurisdictions. Engaging with them, you risk receiving inaccurate information. Moreover, in some cases, they will hire an Estonian law firm to help, and your fees will be much higher since the consulting companies will charge extra on top of the fees from an Estonian law firm.
Be ready to start the business within 6 months after the issuance of the license
The second recommendation is related to a legal requirement indicated in the Money Laundering and Terrorist Financing Prevention Act of Estonia. This is easy to comply with, but quite often, it has been the reason for the revocation of licenses. If you do not want to miss a small detail that can impact your license, please, continue reading.
The widespread reason for revocation of the cryptocurrency licenses by the Estonian Financial Intelligence Unit, or FIU, is that some companies were…