! After the new Regulation Updates of June 2022 we do NOT recommend Estonia as crypto friendly jurisdiction any more.
On November 27, 2017, Estonia enacted amendments to its anti-money laundering legislation that define cryptocurrencies (virtual currencies) as value represented in digital form that is digitally transferable, preservable, or tradable and that natural persons or legal persons accept as a payment instrument, but that is not the legal tender of any country or funds (banknotes or coins, scriptural money held by banks, or electronic money).[1] The anti-money laundering legislation now also applies to providers of a service for exchanging virtual currency with fiat currency and providers of a virtual currency wallet service, which is defined as a service in which keys are generated for customers or customers’ encrypted keys are kept, which can then be used for the purpose of keeping, storing, and transferring virtual currencies.[2] Virtual currency service providers are required to have a license.[3]
Cryptocurrency license process
In April of 2019, the Estonian Financial Intelligence Unit (FIU) created additional regulations for the cryptocurrency license process which included, but was not limited to, paying a licensing fee, registering a headquarters physically located in Estonia, and identifying customers.[4] In addition, new regulations and legislation were considered regarding the governing of crypto tokens and other blockchain adjacent currencies and funds.[5]
Following these new regulations the FIU withdrew more than 1,000 activity licenses of virtual currency companies in 2020. At this time roughly 400 virtual currency service companies remain active in Estonia.[6] Mr. Veiko Tali, the secretary-general of the Ministry of Finance, stated that “the commission plans to retain heightened attention to this topic [in 2021]. A number of important regulatory changes are planned for the services of virtual currencies in order to further regulate the field.”[7]
Source: Freeman Law