Open and innovative cryptocurrency regulations in Estonia are attracting more exchanges as compared to the other European Union states. While the Estonian government classes virtual currencies as digital assets for tax purposes, it does not subject them to VAT. However, in 2017, the Anti Money Laundering and Terrorism Act introduced robust new regulations for crypto exchanges operating in the country.
After the 2017 AML/CFT legislation, crypto exchanges in Estonia operate under a well-defined regulatory framework that entails stringent KYC and reporting rules. As per the present legislation, exchanges need to obtain two licenses from the Financial Intelligence Unit (FIU) of Estonia. These licenses include the Virtual Currency Exchange Service License and the Virtual Currency Wallet Service License.
Estonia’s business-friendly environment, low taxes, a progressive community and free wireless internet on almost every street are enough reasons to lure any cryptocurrency exchange to the country. Also, the business registration process in Estonia is much less time consuming compared to most other countries in the world. The country’s e-residency registration program takes less than 30 minutes to complete. The program ensures a startup is compliant with banking, taxes and gets incorporated effortlessly.
Despite not embracing the concept of cryptocurrencies till early 2017, the Estonian government didn’t overtax cryptocurrency startups. Initial Coin Offering (ICO), which is considered to be a risk-filled crowdfunding model, is also not regulated so much in the country. The government had announced in late 2017 that it has plans of launching a state-sponsored ICO, as reported on International Investment.
The B2BX cryptocurrency exchange announced on November 12 that it has received approval from the Estonian FIU for a regulatory license. This means that the firm will be able to operate as a completely regulated crypto exchange. This makes it one of the first exchanges in Europe to secure this form of recognition, as reported on APNews. The low cost of running and starting a business in Estonia is one of the several reasons that blockchain startups are flocking to the country.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]