Estonia used to be one of those places in Europe where getting a crypto business license was super easy. But now, they’ve yanked 500 out of 1400 licenses, mainly to fight against money laundering. You might recall that huge money laundering scandal linked to a branch of Denmark Bank that hit Estonia, involving around $230 billion, and there’s a lawsuit from investors for $475 million from last year.
On top of that, they’re changing the rules for getting licenses. Instead of the usual 30 days, it’s now going to take 90 days, and the license fee is jumping from 345 EUR to a whopping 3300 EUR. Plus, any crypto business registered in Estonia will have to be incorporated there or set up an Estonian branch if they’re from somewhere else.
Honestly, I think these changes are a good move. If we want crypto to be taken seriously, we need to distance it from being a tool for all sorts of illegal activities.
The cost increase from 345 to 3300 sounds very high though for a startup to pay although is probably in line with other licenses (or still a lot cheaper)...
And yeah trying to take out money laundering is good for them to do unless those people are just going to move elsewhere but just shutting those firms down could send a positive message to other (1) crypto isn't just used for money laundering (2) it's being more actively regulated than it has in the past...
Estonia was definitely the place crypto companies flocked to , in part due to fairly lax regulation, very low licensing fees and mainly due to not needing a physical entity in the country. Places like Malta and Gibraltar are desperate to become crypto islands , with stricter regulations in Gibraltar and Malta , Estonia took advantage but it looks to have backfired.
Malta and Gibraltar , for example (just picked these) require a physical presence in their jurisdictions and the fees are a lot higher -
Gibraltar - up to £30,000
Malta - up to £24,000
These fees have historically put fly by night companies off, perhaps places with stricter controls will help in the long term . I hope so
Man it's ridiculous how low Estonia's still is in comparison. It's also pretty funny seeing Malta's that high, considering its marketing image of Blockchain Island. Either way, this might be the reason why they increased their fees:
Some firms could be getting permits and using those to add some legitimacy in their operations, even without directly being based in Estonia.
It's also worth noting that the banking scandal OP mentioned triggered this change, not any of the crypto companies registered. Bankers and ruining crypto often seems to go hand in hand lol.
If I were a jurisdiction gunning to be a 'crypto haven' I would be demanding of the people who want my endorsement but I'd try to keep the fees as low as possible. We all know it's an early phase with a lot to play for still.
That means you're going to get some absolute scum who you want to deter at all costs, and future titans who you want to retain at all cost. It's quite possible the scum will have more money to throw at you.
I understand the initiative to combat money laundering, and compared to other European countries, Estonia's process and rules on obtaining licenses is still pretty lax and a lot more cheaper and easier. With the surge of crypto firms trying to get registered and obtain that 'legal' status on most books, it's just right that some countries step up their game to avoid having tons of scammers pooled in their area. If we want the scene to improve and to be embraced by a lot of people aside from us, we have to be open on these strict changes for the betterment of the service that really wants to do its bit for the crypto world.
3300 euros is not enough, that obtaining a license and building in Estonia to start work is not expensive, I do not think that a company that wants to start seriously in the activity of encryption does not contain more than 1 bitcoin as founding liquidity.
Are there any legal documents, more restrictions, or just an increase in taxes?
The liquidity has nothing to do with the license's price. The license allows you to run your business and the liquidity indicates its capacity to pay its debts in the short term to pay suppliers, taxes, etc (it's also different from the solvability in accounting).
You can very well have less than 1 BTC (as your example)... if your company doesn't need much (companies don't have accountancy in BTC by the way)
This is a good thing in my opinion, because this will be a good measure to prevent illicit activities, the bureaucracy does have its benefit sometimes. I do not know much about documents though but if I were to deduce there will be more documentations as expected of prolonged registration, I am pretty sure that it will come with more follow-ups.