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Estonian FSA MiCA Guidelines

Tue, 03 Sep 2024 09:33:00 +0000

Authorisation to operate in markets in crypto-assets

The Crypto Markets Act (hereinafter CMA) brought the activities of participants in markets in crypto-assets under the supervision of Finansinspektsioon. The Market in Crypto-Assets Act applies to persons who are engaged in the issuance, offer and admission to trading of crypto-assets on the respective platform, and who provide crypto-asset services within the meaning of Regulation (EU) 2023/1114 of the European Parliament and of the Council (hereinafter MiCA).

For the purposes of CMA and MiCA, crypto-assets are divided into

asset-referenced tokens (also known as ART);
e-money tokens (also known as EMT); and
other crypto-assets (also known as CASP).

Asset-referenced token is a type of crypto-asset that is not an e-money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies.

E-money token is a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency.

Other crypto-assets are a type of crypto-asset that is not an asset-referenced token or an e-money token and that does not reference another value or right or a combination thereof and does not maintain a stable value by referencing the value of one official currency.

Application for authorisation to operate in markets in crypto-assets

When applying for authorisation to operate, a distinction must be made between the asset-referenced token and e-money token issuance service and the provision of other crypto-asset services.

Asset-referenced token issuance service

A person may not make an offer to the public, or seek the admission to trading, of an asset-referenced token unless that person is the issuer of that asset-referenced token and is:

a legal person or other undertaking that is established in the European Union and has been authorised by a responsible supervisory authority in accordance with Article 21 of MiCA; or
a credit institution that complies with Article 17 of MiCA.

Upon the written consent of the issuer of an asset-referenced token, other persons may also offer to the public, or seek the admission to trading, of that asset-referenced token. Those persons must comply with Articles 27, 29, and 40 of MiCA.

A credit institution that intends to provide an asset-referenced token issuance service submits an application for authorisation to operate in markets in crypto-assets in accordance with Article 17 of MiCA and § 6(2) of the CMA. If a credit institution intends to issue, and seek the admission to trading, of e-money tokens, it must comply with the conditions laid down in Article 48 of MiCA and notify the white paper to Finantsinspektsioon.

A legal entity (hereinafter applicant) who intends to issue asset-referenced tokens must submit a written application to Finantsinspektsioon in order to apply for authorisation. The application must be submitted on the basis of the EBA’s RTS for application for authorisation. The application must be submitted in Estonian. If the applicant intends to submit documents pertaining to the application in English, it must be clearly stated in the application.

Information and documents required in Article 18(1) of MiCA must be attached to the application, the content of which is specified in the EBA’s RTS:

the address of the applicant issuer;
the registry code of the legal entity being the applicant issuer;
the articles of association of the applicant issuer;
a programme of operations, setting out the business model that the applicant issuer intends to follow;
a legal opinion that the asset-referenced token does not qualify as either of the following:
1. a crypto-asset excluded from the scope of this Regulation pursuant to Article 2(4) of MiCA; or
2. an e-money token;
a detailed description of the applicant issuer’s governance arrangements as referred to in Article 34(1) of MiCA;
where cooperation arrangements with specific crypto-asset service providers exist, a description of their internal control mechanisms and procedures to ensure compliance with the obligations in relation to the prevention of money laundering and terrorist financing under Directive (EU) 2015/849;
the identity of the members of the management body of the applicant issuer;
proof that the members of the management body of the applicant issuer are of sufficiently good repute and possess the appropriate knowledge, skills and experience to manage the applicant issuer;
proof that any shareholder or member, whether direct or indirect, that has a qualifying holding in the applicant issuer is of sufficiently good repute;
a crypto-asset white paper as referred to in Article 19 of MiCA;
the policies and procedures referred to in the first subparagraph of Article 34(5) of MiCA;
a description of the contractual arrangements with the third-party entities as referred to in the second subparagraph of Article 34(5) of MiCA;
a description of the applicant issuer’s business continuity policy referred to in Article 34(9) of MiCA;
a description of the internal control mechanisms and risk management procedures referred to in Article 34(10) of MiCA;
a description of the systems and procedures in place to safeguard the availability, authenticity, integrity and confidentiality of data as referred to in Article 34(11) of MiCA;
a description of the applicant issuer’s complaints-handling procedures as referred to in Article 31 of MiCA;
where applicable, a list of host Member States where the applicant issuer intends to offer the asset-referenced token to the public or intends to seek admission to trading of the asset-referenced token.

The details of managers must be provided to Finantsinspektsioon via the fit and proper assessment form.

In addition to the above, Finantsinspektsioon’s guidelines , which can be found on the website of Finantsinspektsioon, must be taken into account when preparing the materials required for applying for authorisation and in subsequent activities.

Finantsinspektsioon may demand additional information and documents if it is not convinced on the basis of the submitted information and documents as to whether the applicant for authorisation has adequate facilities for the provision of crypto-asset services or whether it meets the requirements of legal requirements, or if other circumstances relating to the applicant need to be verified.

Finantsinspektsioon will assess whether the application for authorisation for an asset-referenced token is complete within 25 working days from receiving the application for authorisation. Finantsinspektsioon informs the applicant whether the application is complete or incomplete. If Finantsinspektsioon has come to the conclusion that the application for authorisation is complete, Finantsinspektsioon will assess within 60 working days whether the applicant issuer meets the requirements established for the issuer of an asset-referenced token. If any additional questions arise, the time limit for the above procedure may be paused for up to 20 working days.

E-money token issuance service

A person may make an offer to the public, or seek the admission to trading, of an e-money token if that person is the issuer of such e-money token and:

a credit institution or e-money institution; and
has notified the white paper to Finantsinspektsioon and has published the white paper in accordance with Article 51 of MiCA.

Upon the written consent of the issuer, other persons may offer to the public, and seek the admission to trading, of the e-money token. Those persons must comply with Articles 50 and 53 of MiCA.

An e-money institution that intends to operate as a crypto-asset service provider must comply with the conditions for the provision of crypto-asset services as laid down in Article 60 of MiCA and in § 6(3) of CMA and must provide Finantsinspektsioon with proper and complete information.

By its decision, Finantsinspektsioon confirms the right of a credit institution and e-money institution to offer, and seek the admission to trading, of an e-money token issued by them if the credit institution or e-money institution complies with the conditions provided in Article 48 of Regulation (EU) 2023/1114 of the European Parliament and of the Council and has notified the white paper to Finantsinspektsioon.

Other crypto-asset services

An applicant that intends to operate as a crypto-asset service provider must comply with the conditions for the provision of crypto-asset services as laid down in Article 62 of MiCA and in § 6(1) of the CMA and must provide Finantsinspektsioon with proper and complete information.

In order to provide other crypto-asset services, the applicant submits an application for authorisation on the form of Annex VI to the ESMA’s RTS.

An application for authorisation must be accompanied by the information and documents required in Article 62(2) of MiCA, the content of which is specified in Annex V to the ESMA’s RTS:

the name, including the legal name and any other commercial name used, the legal entity identifier of the applicant crypto-asset service provider, the website operated by that provider, a contact email address, a contact telephone number and its physical address;
the articles of association of the applicant crypto-asset service provider;
a programme of operations, setting out the types of crypto-asset services that the applicant crypto-asset service provider intends to provide, including where and how those services are to be marketed;
proof that the applicant crypto-asset service provider meets the requirements for prudential safeguards set out in Article 67 of MiCA;
a description of the applicant crypto-asset service provider’s governance arrangements;
proof that members of the management body of the applicant crypto-asset service provider are of sufficiently good repute and possess the appropriate knowledge, skills and experience to manage that provider;
the identity of any shareholders and members, whether direct or indirect, that have qualifying holdings in the applicant crypto-asset service provider and the amounts of those holdings, as well as proof that those persons are of sufficiently good repute;
a description of the applicant crypto-asset service provider’s internal control mechanisms, policies and procedures to identify, assess and manage risks, including money laundering and terrorist financing risks, and business continuity plan;
the technical documentation of the ICT systems and security arrangements, and a description thereof in non-technical language;
a description of the procedure for the segregation of clients’ crypto-assets and funds;
a description of the applicant crypto-asset service provider’s complaints-handling procedures;
where the applicant crypto-asset service provider intends to provide custody and administration of crypto-assets on behalf of clients, a description of the custody and administration policy;
where the applicant crypto-asset service provider intends to operate a trading platform for crypto-assets, a description of the operating rules of the trading platform and of the procedure and system to detect market abuse;
where the applicant crypto-asset service provider intends to exchange crypto-assets for funds or other crypto-assets, a description of the commercial policy, which is non-discriminatory, governing the relationship with clients as well as a description of the methodology for determining the price of the crypto-assets that the applicant crypto-asset service provider proposes to exchange for funds or other crypto-assets;
where the applicant crypto-asset service provider intends to execute orders for crypto-assets on behalf of clients, a description of the execution policy;
where the applicant crypto-asset service provider intends to provide advice on crypto-assets or portfolio management of crypto-assets, proof that the natural persons giving advice on behalf of the applicant crypto-asset service provider or managing portfolios on behalf of the applicant crypto-asset service provider have the necessary knowledge and expertise to fulfil their obligations;
where the applicant crypto-asset service provider intends to provide transfer services for crypto-assets on behalf of clients, information on the manner in which such transfer services will be provided;
the type of crypto-asset to which the crypto-asset service relates.

The details of managers must be provided to Finantsinspektsioon via the fit and proper assessment form.

In addition to the above, Finantsinspektsioon’s guidelines, which can be found on the website of Finantsinspektsioon, must be taken into account when preparing the materials required for applying for authorisation and in subsequent activities.

A person offering, or seeking the admission to trading, of other crypto-assets has the right to operate as a participant in markets in crypto-assets if the conditions laid down in Articles 4(1) and 5(1) of MiCA are met.

The application must be submitted in Estonian. If the applicant intends to submit documents in English, it must be clearly stated in the application.

Finantsinspektsioon may demand additional information and documents if it is not convinced on the basis of the submitted information and documents as to whether the applicant for authorisation has adequate facilities for the provision of crypto-asset services or whether it meets the requirements of legislation, or if other circumstances relating to the applicant need to be verified.

Finantsinspektsioon will assess whether the application for authorisation for other crypto-asset services is complete within 25 working days. Finantsinspektsioon informs the applicant of whether the application is complete or incomplete. If Finantsinspektsioon has come to the conclusion that the application for authorisation is complete, Finantsinspektsioon will assess within 40 working days whether the applicant crypto-asset service provider meets the requirements of MiCA and CMA. The aforementioned time limit may be paused for up to 20 working days. The applicant will be informed about it within five working days after making the decision.

Processing fee

The processing fee payable when applying for authorisation of a crypto-asset service provider, issuer of an asset-referenced token or e-money institution is 3,000 euros.

Cross-border provision of crypto-asset services

If a crypto-asset service provider intends to provide crypto-asset services in more than one Member State, the following information to the competent authority of the home Member State must be submitted:

a list of the Member States in which the crypto-asset service provider intends to provide crypto-asset services;
the crypto-asset services that the crypto-asset service provider intends to provide on a cross-border basis;
the starting date of the intended provision of the crypto-asset services;
a list of all other activities provided by the crypto-asset service provider not covered by MiCA.

A crypto-asset service provider may begin to provide services in the Member States set out in the notification from the day when the competent authority of that State has received the notification of Finantsinspektsioon or at the latest after 15 calendar days have passed from the submission of the information to Finantsinspektsioon. No processing fee is to be paid upon notification of cross-border provision of services.

Estonian FIU annual report

Thu, 04 Apr 2024 09:18:00 +0000

On 03.04.2024 Estonian FIU posted its annual report according to which the risk of #moneylaundering remains at medium level in Estonia.

In 2023, the FIU received 12,500 reports. About €3.85 million worth of property was restricted by court permission for a year. Additionally, 10 injunctions were issued, transferring nearly €1.36 million to the state. By the year's end, courts had seized approximately €9.2 million, initially identified and restricted by the FIU. As of December 31, 2023, the FIU had frozen €33 million due to financial sanction. Moreover, 150 market participants either gave up or lost their licenses. In 2023, nearly 5,000 individuals benefited from various training and information events.

Obtaining a VAT number in Estonia

Wed, 27 Mar 2024 10:59:00 +0000

The number of the Value Added Tax payer or VAT nr. is assigned to the entrepreneur on the basis of an application submitted to the Tax and Customs Board. The obligation to register as a VAT payer arises when the VAT taxable turnover of the company exceeds 40,000 euros in one business year. If the taxable turnover has not yet surpassed the previously defined threshold, but the company has directly commenced commercial activities and obtaining a VAT number is a reasonable step, considering the specifics of the business model and the expected business flows of the project, the entrepreneur has the right to register as liable for turnover tax on a voluntary basis.

#eresidency #estonia #opencompanyinestonia

Wed, 27 Mar 2024 08:32:00 +0000

🔴 Estonia is going to promote its e-Residency Program abroad

The Enterprise and Innovation Foundation (EISA) of Estonia is going to widely introduce Estonian e-residency program to Spain, Germany and UK.

Through e-residency, citizens of other countries can use Estonian public and private sector services, and in order to introduce this opportunity to the world, EISA has an e-residency program.

Advantages of E-Residency for Business:
✅ Efficient Company Formation: Establish your company in Estonia swiftly, completing the entire process in just 30 minutes.
✅ Seamless Documentation: Submit petitions and statements to the Commercial Register effortlessly through a user-friendly online platform.
✅ Tax Efficiency at Your Fingertips: Access the e-Tax department to seamlessly submit declarations, optimizing your tax management strategy for heightened financial efficiency.
✅ Global Accessibility: Sign contracts and oversee all facets of your company securely from any location with an internet connection, whether it be Riga, Rio de Janeiro, or beyond.y area with an internet connection.
✅ Regulatory Clarity with Activity Licenses: Gain direct access to the Registry of Activity Licenses, ensuring a clear understanding of regulatory requirements and compliance for your business operations.
✅ Timely Reporting: Streamline your reporting obligations by easily submitting annual reports through the business register, ensuring your company stays on track with regulatory timelines and commitments.
✅ Cost-Effective Administration: Enjoy the benefits of a cost-effective business administration model, optimizing your financial resources for enhanced profitability and growth.

Elevate your business operations with the unparalleled advantages of e-residency, positioning your company for global success and sustainable growth.

The first joint report of FIU and Eesti Pank must be submitted in April

Thu, 14 Mar 2024 10:16:00 +0000

Kind reminder for Estonian-based #cryptocompanies. The first joint report of FIU and Eesti Pank must be submitted in April.

The report shall be submitted within 20 days after the end of the reporting period. Reporting period is one quarter.

The reports of #CASPs are integrated reports, with which the collected data is used by FIU for the performance of its supervisory tasks and by Eesti Pank for national statistics.

e-Residency Program abroad

Thu, 14 Mar 2024 10:14:00 +0000

#eresidency #estonia #opencompanyinestonia

🔴 Estonia is going to promote its e-Residency Program abroad

The Enterprise and Innovation Foundation (EISA) of Estonia is going to widely introduce Estonian e-residency program to Spain, Germany and UK.

Through e-residency, citizens of other countries can use Estonian public and private sector services, and in order to introduce this opportunity to the world, EISA has an e-residency program.

Advantages of E-Residency for Business:
✅ Efficient Company Formation: Establish your company in Estonia swiftly, completing the entire process in just 30 minutes.
✅ Seamless Documentation: Submit petitions and statements to the Commercial Register effortlessly through a user-friendly online platform.
✅ Tax Efficiency at Your Fingertips: Access the e-Tax department to seamlessly submit declarations, optimizing your tax management strategy for heightened financial efficiency.
✅ Global Accessibility: Sign contracts and oversee all facets of your company securely from any location with an internet connection, whether it be Riga, Rio de Janeiro, or beyond.y area with an internet connection.
✅ Regulatory Clarity with Activity Licenses: Gain direct access to the Registry of Activity Licenses, ensuring a clear understanding of regulatory requirements and compliance for your business operations.
✅ Timely Reporting: Streamline your reporting obligations by easily submitting annual reports through the business register, ensuring your company stays on track with regulatory timelines and commitments.
✅ Cost-Effective Administration: Enjoy the benefits of a cost-effective business administration model, optimizing your financial resources for enhanced profitability and growth.

Elevate your business operations with the unparalleled advantages of e-residency, positioning your company for global success and sustainable growth.

ESMA is preparing the implementation of the Markets in Crypto-Assets Regulation

Fri, 09 Feb 2024 13:16:00 +0000

ESMA is preparing the implementation of the Markets in Crypto-Assets Regulation. #MiCA is a crucial regulatory step, but it does not address all the risks associated with cryptos – hence it is not a safe haven for investors 🙉. Based on our experience with two rounds of consultations launched and one yet to come, a constructive dialogue with the industry, and a fruitful exchange with decision makers, we put together a few important reminders

🗓️ Timeline buzz: While MiCA has been adopted by legislators, there is still a long way before it fully enters into application – July 2026.

⚠️ Transitional period: The period before full application might create confusion for investors regarding applicable rules and increase the risk of regulatory arbitrage.

🧿 National eye: Competent authorities will set in place authorisation procedures, communication lines with industry, effective coordination with other EU NCAs.

🔊 Industry take: Get ready-set-go for adapting business practices and applying the MiCA rules as early as possible.

Company in Croatia EU

Mon, 18 Dec 2023 13:14:00 +0000

Setting up a company in Croatia can offer several advantages, making it an attractive location for business establishment:

Strategic Location: Croatia's geographical location provides access to both Central and Southeast Europe, serving as a bridge between Western Europe and the Balkans. This can be advantageous for companies aiming to access markets in these regions.
EU Membership: Croatia is a member of the European Union (EU) since 2013. This membership provides businesses with access to EU markets, funding, and various support programs aimed at fostering economic growth and development.
Business Incentives: The Croatian government offers various incentives to attract foreign investments, such as subsidies, grants, tax breaks, and other financial benefits to stimulate economic activities and job creation.
Skilled Workforce: Croatia has a relatively well-educated and skilled workforce, particularly in sectors such as tourism, IT, engineering, and manufacturing. The availability of skilled labor can be beneficial for companies seeking specific expertise.
Tourism Potential: Croatia's beautiful coastline, historic cities, and natural landscapes attract millions of tourists annually. For businesses in the hospitality, travel, and leisure industries, this presents opportunities for growth and expansion.
Infrastructure Development: Croatia has been investing in improving its infrastructure, including transportation networks, ports, and energy systems. This ongoing development can benefit businesses by providing better logistical support and connectivity.
Quality of Life: Croatia offers a high quality of life with a Mediterranean climate, beautiful scenery, and a relatively low cost of living compared to some other European countries. This can be appealing for expatriates and employees relocating for work.
Stable Political Environment: Croatia has a stable political environment, which is crucial for business stability and growth. Being a part of the EU further ensures adherence to EU regulations and standards, offering a predictable business environment.
Ease of Doing Business: Efforts have been made to simplify administrative procedures and improve the ease of doing business in Croatia. The government has implemented measures to streamline processes, reducing bureaucracy for entrepreneurs.
Investment Opportunities: There are various sectors with untapped potential for investment in Croatia, such as renewable energy, technology, agriculture, and infrastructure, providing opportunities for innovative businesses.

Before setting up a company in Croatia, it's essential to conduct thorough research, consider the specific industry, understand local regulations, and consult with legal and financial advisors to ensure a smooth and successful establishment of your business.

In Croatia, dividends refer to the distribution of profits that a company pays to its shareholders from its after-tax earnings. Here are some key aspects related to dividends in Croatia:

Taxation on Dividends: Dividends received by shareholders in Croatia are subject to taxation. As of my last knowledge update in January 2022, dividends were taxed at a flat rate of 12% for residents and non-residents alike. However, tax rates and regulations may have changed, so it's crucial to verify the current tax laws with a professional or relevant authorities.
Tax Treaties: Croatia has tax treaties with various countries to avoid double taxation on dividends. These treaties might reduce the tax rates on dividends for shareholders residing in countries that have such agreements with Croatia.
Withholding Tax: In Croatia, withholding tax is applied on dividends paid to non-residents. The rate is typically 12% but may be reduced according to tax treaties between Croatia and the shareholder's country of residence.
Imputation System: Croatia uses a partial imputation system for dividends. This means that the tax paid by the company on its profits is attributed as a tax credit to the shareholders receiving dividends. This credit helps offset the tax liability of the shareholder to some extent.
Legal Requirements: Companies distributing dividends must comply with legal requirements, including having sufficient distributable reserves and following the rules outlined in the Companies Act and other relevant regulations.
Tax Reporting and Compliance: Both companies paying dividends and shareholders receiving them have certain tax reporting and compliance obligations in Croatia. Companies need to declare dividends distributed, and shareholders need to report received dividends in their tax returns.

It's important to note that tax laws and regulations are subject to change, and the specifics regarding dividends can vary based on the type of company, the residency status of shareholders, and any bilateral tax agreements in place between Croatia and other countries.

For accurate and up-to-date information on dividends, taxation, and any recent changes in Croatian tax laws regarding dividends, it's advisable to consult with a tax professional, accountant, or legal advisor familiar with Croatian tax regulations.

CASP & Internal control

Wed, 13 Dec 2023 10:12:00 +0000

#CASP #InternalControl

#InternalControl refers to the measures and processes put in place by #cryptoserviceproviders (#CASP ) to ensure the security, integrity, and reliability of their #cryptocurrency operations. It involves the implementation of policies, procedures, and technologies to safeguard digital assets, prevent fraud, and mitigate risks associated with #cryptocurrencies.

Even if the risks were assessed correctly, but the #InternalControl is not in place, understanding the risks without taking appropriate measures and without control over them, will not guarantee that #CASP activity is compliant with laws and regulations.

Nowadays finding a balance between keeping costs low due to economic downturn and being compliant with laws and regulations is a challenge.

One of the most important thing here is to choose the right and cost-effective methods for the smooth operation of #InternalControl. For instance, even when you have top service providers there is no confidence that the processes are being monitored in right way (for example, one person is responsible for initiating transactions and approving them).

Overall, #InternalControl is essential for #CASPs to protect their digital assets, maintain the trust of their stakeholders, and ensure the smooth and secure operation of their cryptocurrency activities.

Some key components of #InternalControl in #CASP include:

1. Segregation of duties, which includes preventing any single person from having complete control over the entire process. For example, the person responsible for initiating transactions should be different from the person responsible for approving them.

2. Access controls, which includes establishing strict controls over access permissions to #cryptocurrencyWallets, private keys, and other sensitive information.

3. #TransactionMonitoring monitoring, which includes having systems in place to monitor and track transactions.

4. Security measures, which includes implementing robust security measures to protect #cryptocurrency holdings from external threats, such as using secure wallets and storage solutions, encrypting sensitive data, regularly updating software and firmware, and conducting vulnerability assessments and penetration testing.

5. Training and awareness. It is crucial to provide training and awareness programs to employees about the risks and best practices associated with #cryptocurrencies. Employees who have the proper skills and are trained on an ongoing basis are best investment to the future of every #CASP.

6. #Compliance with regulations, which includes ensuring that #CASPs #crypto operations comply with relevant laws and regulations, such as #AML and #KYC requirements.

Finitive Technologies OÜ new activity licence

Wed, 22 Mar 2023 11:33:00 +0000

On 28 February 2023, the Estonian Financial Intelligence Unit issued new activity licenses to Finitive Technologies

Finitive Technologies OÜ licence No FVT000547, registry code 16313563

Congratulations on obtaining your financial license!