Welcome to the Crypto-Licence Research Portal, an independent Internet resource for crypto-licence research in Europe.

TERMS OF CRYPTO LICENSE IN EUROPE

Independent Internet portal RUE.EE carried out a global study on obtaining a license for transactions in cryptocurrency assets in the five most popular European jurisdictions. The comparison table will help you choose the most appropriate jurisdiction for your cryptographic project.
Lithuania Estonia Gibraltar Switzerland Malta
Period for consideration
up to 1 month up to 2 months up to 4 months up to 1 year up to 6 months
State fee for application
No 3,300 EUR from 11,800 EUR 1,750 EUR 24,000 EUR
Required share capital 2,500 EUR 12,000 EUR 33,000 EUR 300,000 EUR 730,000 EUR
Corporate income tax 5 – 15% 0% 0% 11% – 24% 35%
Annual fee for supervision No No 35,000 EUR 3,500 EUR 50,000 EUR
Local staff member No Required At least 2 At least 2 At least 3
Physical office No Required Required Required Required
Accounting audit No No Required No Required

Cryptocurrency licence in Lithuania

At the moment, Lithuania is one of the few member states of the European Union where legal financial transactions with cryptocurrency are possible and there is official permission to conduct and regulate cryptographic business from the state. Widely recognized in the traditional financial sector (FIAT) and in the licensing of electronic money, the Lithuanian government also offers the authorization of a virtual currency.

In Lithuania it is possible to obtain two types of licenses for working with virtual currency:

  • Cryptocurrency exchange license (Cryptocurrency exchange license). A company with such a license is able to exchange digital currency for capital or vice versa, or cryptocurrency for another cryptocurrency, receiving a commission for the services provided.
  • Crypto wallet and custodian services license (Crypto wallet and custodian services license). A licensed company can manage customer purses to store cryptocurrency, including generating and storing encrypted client keys.

General regulations

During the licensing process, the regulator has the right to request additional information and a detailed/white paper description of the proposed activity of the cryptographic company. A licence may be issued only after all necessary information is considered sufficient and all licensing conditions are met.

Any change in the structure of a cryptocurrency company after obtaining a license (address,  owner, board member, beneficiary, AML officer) requires registration of changes in the register with the full set of documents.

The application for a cryptocurrency licence is considered and regulated by FCIS and issued by the Lithuanian Business Register. FCIS is an independent structural unit of the Lithuanian Police and Border Police Department.

Cryptocurrency companies are regulated by the Law on the Prevention of Money Laundering and Financing of Terrorism, in particular Order No V-5 of January 2020.

Licensing process

In order to apply for a cryptocurrency license, a limited liability company (UAB) must be established in Lithuania to provide cryptocurrency exchange or storage services. The minimum requirement for the company’s authorized capital is 2500 EUR. The establishment of a cryptographic company may be carried out entirely remotely without the need to visit Lithuania by proxy or by means of an electronic resident card of Lithuania.

The minimum requirement for the structure of a cryptocurrency company is one member, who can be both owner and board member. He is also an officer of the cryptographic company AML.

AML officer/officer for prevention of money laundering and financing of terrorism must have previous professional experience and an impeccable reputation (Lithuanian residency is not necessary).

The licensed company must keep a detailed and up-to-date overview of all customers and transactions in accordance with AML/KYC rules. The FCIS Control Authority can make requests about the company’s activities, especially regarding compliance with predetermined AML/KYC policies.

Requirements for the company

The following requirements are imposed on companies providing services in the cryptocurrency sector:

  • All clients must undergo identity checks and identification procedures;
  • Customer data should be stored with the possibility of being made available to the regulator;
  • The company should have internal control and risk assessment procedures;
  • Having a KYC/AML compliance officer
  • Reporting to the regulator (Financial Crimes Investigation Service).

Board members as well as owners of the company must meet the requirements of impeccable reputation and have no criminal record.

There is no need for owners or board members of a cryptographic company to be physically present in Lithuania so that foreigners/non-residents of Lithuania can legally engage in cryptographic activities while in their country.

Application for a cryptocurrency licence in Lithuania will require the following:

  • Apostille copies of passports of all project participants
  • CV of all project participants
  • Virtual or physical office not territory of Lithuania
  • Board should have a good business reputation (no criminal record)
  • AML officer must prove a good business reputation with no criminal record) and provide
    supporting documentation regarding relevant education, skills and prior experience in
    this field
  • AML officer can be replaced by a third-party KYC/AML supplier with whom a
    cooperation agreement has been concluded
  • There are no restrictions by country of residence of owners/board members if AML is a
    private person.
  • Procedural Rules, KYC/AML Procedures and Business Plan

Requirements for company members

  • At least one owner (natural or legal person). There are currently no restrictions on the nationality or residence of members of the company.
  • At least one board member (may be the same owner). No restrictions on citizenship or residence. There are currently no restrictions on the nationality or residence of members of the company.
  • AML compliance officer (may be the same owner). No restrictions on citizenship or residence. Professional experience and compliance with FCIS requirements is mandatory.
  • The company has an office. The use of a virtual office is permitted.
  • The data of all beneficial owners (UBO) must be provided upon application.

Necessary documents

The following documentation will be required to review and prepare an application for a cryptocurrency licence:

  • Valid copy of passport from home country
  • Power of attorney (PoA) (if the process of opening a company and obtaining a license takes place remotely)
  • Company business model/detailed activity description
  • CV/Summary of experience and education of all participants in the cryptographic project
  • Website address where cryptocurrency services will be offered
  • Certificate of criminal record from the criminal record (not more than 3 months) for owners, board members, final beneficiaries (UBO) and AML officers

Companies offering licensing services in Lithuania

A legal company that can accompany in the process of obtaining a cryptocurrency license in Lithuania – click here.

Reporting requirements

The cryptocurrency company has no special reporting requirements to the tax authorities. Accounting must be provided in the same way as for any other Lithuanian company. No special reporting to the regulator is required, but FCIS is always able to make prescriptions and requests about the activities of the cryptographic company. The basic requirement of the FCIS is to comply with AML/KYC requirements, such as the collection of client data from a cryptographic project and the possibility of making them available to the regulator on demand.

Taxation of cryptocurrency companies in Lithuania

  • Virtual currency exchange services are not subject to VAT.
  • Services provided that are paid in virtual currencies are subject to normal VAT
  • The cryptocurrency company’s profits are taxed at a rate of 15%. A micro company with less than ten employees and less than 300,000 Euro turnover can be taxed at a reduced corporate tax rate of 0-5%.
  • Income tax at a rate of 15 per cent is levied on the distributed income (dividends paid).

The taxation of transactions in virtual currency depends on the nature of the transactions. There is no direct tax if the token is sold or purchased similarly to a security, investment or other currency.

Cryptocurrency licence in Estonia

Today, Estonia is the unqualified leader among European countries in the number of cryptocurrency licences issued.

The National Financial Intelligence Unit (Rahapesu Andmebüroo or RAB) is the regulator responsible for granting a crypto license in Estonia. For activities which are now merged into a single Virtual Currency Service Provider License.

The Act on the Prevention of Money Laundering and the Financing of Terrorism requires a license called single cryptocurrency license. Two different services fall into this category: to work as a service provider of a virtual currency purse and as a virtual currency exchanger. Previously (until 10 March 2020) Two different licenses in Estonia:

  • Management of crypto-wallets and caste services
  • Cryptocurrency exchange services for fictitious money or vice versa, or
    cryptocurrency for another cryptocurrency.

 

General provisions

Cryptocurrency purses are digital offline and online methods that rely on public-key cryptography to allow users to send and receive cryptocurrencies safely through the Internet.

There are two types of purses: cold (offline – for example, a hardware purse, a paper purse for a cryptocurrency) and hot (online) storage. The difference is that the former keep digital coins offline, without access to the Internet. Hot wallets are mostly used for small-scale storage or for everyday use. Among the purses for hot storage are ordinary and multi-currency purses for cryptocurrency.

The cryptocurrency license in Estonia allows to provide the service of the cryptocurrency purse both cold and hot storage.

The cryptocurrency license in Estonia also allows the exchange of cryptocurrency for FIAT and cryptocurrency for cryptocurrency.

Licensing process

An application for a cryptocurrency licence in Estonia may be made by a member of the board of the company. An application for a licence may be submitted electronically if an e-resident card is available when visiting a notary in Tallinn. The State fee for a license application is EUR 3,300. The fee must be paid to the Estonian Ministry of Finance. The Money Laundering Data Office (a separate entity within the Police and Border Police Department) decides on the issue of a licence within 60 working days of the application. A crypto license is issued for an indefinite period.

In order to get a license, the following data must be submitted:

  1. Business contacts (telephone number, e-mail address and postal address), CV;
  2. The address of the place where services are offered, including the address of the web page;
  3. Name and contact details of the person responsible for the proposal;
  4. The name, personal code (if no date of birth), place of birth and address of residence of the real beneficiary of the company;
  5. Procedural and internal control rules established pursuant to articles 29 and 30 of the Law on Prevention of Money Laundering and Financing of Terrorism, and in the case of persons with special duties listed in section 6 of the International Sanctions Act, the procedural rules established under section 13 of part 6 of the International Sanctions Act and the procedure for verifying their implementation;
  6. Name, personal code (if not date of birth), place of birth, nationality address of residence, position and contact details of the contact person mentioned in the Article 29 of Part 3 or Part 4, Article 29 of the Law on Prevention of Money Laundering and Financing of Terrorism;
  7. Name, personal code (if not date of birth), place of birth, nationality, address of residence, position and contact details of the person responsible for applying the international financial sanctions established by the entrepreneur in accordance with article 13.9;
  8. If the entrepreneur, board member, proxy, real beneficiary or owner is a citizen of a foreign State or if the entrepreneur is a foreign person, A certificate from the Register of Penalties of his country of origin or an equivalent document issued by a judicial or administrative authority confirming the absence of punishment for a crime against public authority, Money-laundering offences or other intentional offences committed within three months of the date of their issuance, which have been certified by a notary or other equivalent and have been legalized or approved by a substitute certificate for legalization (apostille) unless otherwise implied by the treaty.

Requirements for the company

In connection with the Law on the Suppression of Money Laundering and Financing of Terrorism in 2020, some amendments were made to Estonian legislation introducing stricter requirements for companies applying for a crypto licence in Estonia:

  • The minimum authorized capital of the cryptocurrency company is 12,000 euros. It must be paid in full before filing an application. This amount can then be used to finance the company’s business activities.
  • The state fee is 3,300 euros.
  • The company requires a corporate account (IBAN) before submitting an application.
    Estonian banks do not accept applications to open a bank account for cryptocurrency companies, however, companies have the right to open an account in the payment systems of those entitled to operate in Estonia.
  • The management and the place of activity of the company should be in Estonia.
  • The company applying for a licence must have a legal address in Estonia.
  • The presence of the director of the company who is an Estonian citizen is
  • Upon application, the KYC / AML employee will have to be interviewed by the RAB to
    confirm his qualifications and suitability for the position.

Currently, according to information received from RAB, there are about 400 companies licensed to provide virtual currency services in Estonia.

Companies offering licensing services in Estonia

A legal company that can accompany in obtaining a cryptocurrency license in Estonia.

Taxation of cryptocurrency companies in Estonia

There is no special tax on cryptocurrency in Estonia. Cryptographic activities are subject to the same rules as other activities in Estonia.

The corporate tax in Estonia is 0%. The dividend tax rate is 25%. In order to pay dividends to a member of the board, it is necessary to draw up a report on profits for the current period.

The VAT rate in Estonia is 20%. Companies are obliged to register as a VAT taxpayer if sales in Estonia exceed 40,000 euros from the beginning of the calendar year. The company can also apply for VAT registration before reaching the threshold.

Requirements for Estonian cryptocurrency companies in 2022

In October 2021, Matis Mäeker, head of the Money Laundering Bureau (RAB), proposed that the licensing system for cryptocurrency companies in Estonia should be reviewed.

According to proposals from Matis Mäeker, the equity of cryptographic companies should be increased to 350,000 euros, and the company should have this money in the form of cash or low-risk securities. Also, the structure of the cryptocurrency company should consist of at least two people and the management of the company (shareholder, director) cannot hold the position of KYC/AML officer – this position must be separated from the direct management of the company to avoid a conflict of interest.

Other RAB recommendations include requiring companies operating in this sector to have safer IT systems and, for example, to use cash for investments rather than refinancing clients’ funds.

Mäeker estimates the turnover of Estonian cryptocurrency companies at more than 20 billion euros per year.

In fact, the FIU had already revoked 1,808 cryptocurrency licenses in 2020, but in September 2020, a risk assessment conducted by the agency showed that the changes made so far were not sufficient to reduce rapidly growing risks.

Cryptocurrency licence in Gibraltar

The cryptocurrency license in Gibraltar is available from January 2018. Companies that are registered in Gibraltar and provide virtual currency exchange services must apply for a DLT licence in accordance with the decision of the Government of Gibraltar. The Gibraltar Financial Services Commission (GFSC) has issued a Guide specifically designed to support DLT providers in translating this principle into good practice. DLT providers are subject to obligations under the Proceeds of Crime Act (POCA) and the Guidance Notes issued under POCA on Control Systems to prevent the use of the financial system for AML / FT.

The duration of the application is approximately 3 months

The amount of the fee for applying for a cryptographic licence in Gibraltar is directly related to the activities of the company. The amount of the state duty can vary from 11,800 euros to 35,000 euros.

The company’s statutory capital is established individually on the basis of the business plan. The issuance of a licence is determined on a case-by-case basis.

General provisions

A company applying for a cryptocurrency licence in Gibraltar must meet the following requirements:

  • The company must submit a detailed business plan;
  • The company should have a platform;
  • The company’s seat of management is in Gibraltar. The director must participate in the commercial activities of the company;
  • Having a bank account in a bank in Gibraltar;
  • Presentation with bank and GFSC;
  • Minimum of two employees in Gibraltar. Requirements for previous financial/cryptocurrency experience and an impeccable reputation.

Requirements for the company

  • Minimum of 1 shareholder without restriction by nationality or place of residence
  • At least 2 Directors (at least 1 fully voting Director must be resident in Gibraltar)
  • At least one key staff member other than the Director should be based in Gibraltar.
  • Detailed business plan
  • Operating platform
  • Website
  • Financial projections for the coming period

Requirements for company members

  • Notarized identity document
  • Notarized utility bill
  • Certified bank statement
  • Two professional letters of recommendation
  • Confirmation of source of funds
  • Notarized certificate of no criminal record
  • CV with previous places of work
  • Notarized copies of diplomas

If the documents are not in English, they must be accompanied by a notarized translation.

It should also be borne in mind that additional documents could be requested by the regulator or the Bank of Gibraltar at any time to support the application.

To date, about 10 cryptocurrency companies have been licensed in Gibraltar.

Taxation of cryptocurrency companies in Gibraltar

The rate of tax on profits received outside Gibraltar is 0% The rate of tax on profits received in Gibraltar is 10% The rate of value-added tax is 0.

All licensed companies in Gibraltar are required to undergo an annual audit.

Cryptocurrency licence in Switzerland

The financial regulator in Switzerland is the Swiss Financial Market Supervisory Authority, or FINMA, and all cryptocurrency companies must obtain a license to regulate their financial transactions. The process of obtaining a cryptocurrency license in Switzerland takes between 4 and 6 months.

Based on the FINMA recommendations, virtually all activities in the cryptocurrency domain are subject to one of the following licenses (depending on the business model of the company, its cryptographic activities may be subject to multiple licenses at the same time):

  • License of financial intermediary (fintech);
  • Licence for banking services;
  • Investment fund licence;
  • Securities dealer’s license.

As a rule, the Swedish company must obtain one of the following licenses in order to provide cryptocurrency services: a Fintec license and a license for banking services. Bank license allows to attract unlimited number of deposits from natural or legal persons. The capital requirement of the company applying for the license is 10 million euros. The Fintech license allows accepting deposits of up to 100 million euros, and the capital requirements are much lower. The regulator’s main requirement for the size of the authorized capital is that companies with this type of financial licence must maintain a statutory capital of at least 3 per cent of deposits made by customers and at least 300,000 euros.

Requirements for the company

Companies interested in obtaining a licence to exchange and store cryptocurrency in Switzerland must comply with the requirements for registration of a legal person in Switzerland.

  • For a GMBH-type company, the authorized capital is EUR 20,000
  • For a company of type AG, the authorized capital is EUR 100,000

The company must have at least one shareholder and one director.

License of financial intermediary (fintech)

Under the Anti-Money Laundering Act (AMLA), financial intermediaries that are not members of a self-regulating organization require a licence from FINMA. Before a licence can be issued to a financial intermediary (DSFI), the operating company must comply with the licensing conditions set out in the Act (Article 14 AMLA).

The financial intermediary shall:

  • be entered in the business register as a place of business and have an official business permit;
  • be able to meet AMLA requirements with appropriate organizational structure and internal regulations;
  • have a good reputation and be able to guarantee both compliance with its obligations under AMLA and proper conduct of business. These conditions apply both to the organization itself and to those responsible for its administration and management.

 

Annexes must demonstrate that prospective licensees will comply with all licensing requirements specified in the Act or will do so as soon as the permit is obtained.

Applications must be submitted in the official language of the Swiss Confederation and signed by the applicant. Applications submitted by the applicant’s legal representative must be

signed by this person. A certified copy of the person’s power of attorney should also be attached.

FINMA will process the application after it has been correctly and fully filed. If necessary, the applicant may be requested to provide additional information or documents to establish full compliance with licensing requirements.

The license of the financial intermediary (fintech) allows the company to both store and trade in virtual currencies, with the management of the company as well as the location of the company in Switzerland.

Necessary documents

The following documents are required for those wishing to apply for a licence from a financial intermediary (fincht) in Switzerland:

  • Copies of identity documents (owner and director’s passport)
  • Copies of residence permits in Switzerland for foreign nationals;
  • CV members of the company;
  • Certificates of education of participants;
  • Certificate of absence of criminal record of company participants;
  • Confirmation of source of funds
  • Documentation describing the internal organization of the company: 1) The business plan, including the budget for the next 3 financial years, with a plan of realistic, optimistic and pessimistic scenarios; 2) Detailed information on the custody of clients’ deposits;

If the shareholders and / or directors are legal entities, a complete set of the company’s published documents must be provided.

Taxation of cryptocurrency companies in Switzerland

Corporate income tax is levied at the federal, municipal and cantonal levels.

The municipal/cantonal tax ranges from 1.5 per cent for the canton of Lucerne to 12.8 per cent for the canton of Fribourg. Each canton has its own peculiarities.

Each canton has its own tax legislation and collects cantonal and communal income and capital taxes at different rates. The combined effective tax rate ranges from 11.5 per cent to 24.2 per cent, depending on the location of the company in Switzerland.

Under certain conditions, companies with a predominantly foreign business may have cantonal and communal tax exemptions or exemptions and be taxed at an effective tax rate of 7,83% to 11% on profits from foreign sources.

The effective rate of federal tax is 7.83% – 8.5% and is levied on the total amount remaining after basic taxes.

The company’s dividends are also taxed, depending on the country of residence of the company’s owners. Standard rate for dividend payment – 35%

Capital tax on the company: It is levied only at the cantonal level at a rate ranging from 0.01 per cent to 0.5 per cent of the amount of capital paid (depending on the canton).

Cryptocurrency licence in Malta

Malta was the first country in Europe to adopt legislation on cryptocurrency at the national level, attracting to the island the world’s largest cryptocurrency exchanges.

Malta has developed a legal framework to regulate various forms of virtual financial assets (VFA) and services related to virtual financial assets (also referred to as VFA services. Cryptocurrency companies are governed by three laws:

  • Law on Innovative Technology Agreements and Services (ITAS Law), which provides for registration of technology service providers and certification of technology agreements.
  • The Virtual Financial Assets Act (VFAA), which is responsible for regulating VFA service providers, the primary supply of coins (ICO) and VFA agents.
  • Malta’s Digital Innovation Act (MDIA Act), which regulates the Malta Digital Innovation Authority (MDIA)

As stipulated by VFAA, no organization is allowed to offer VFA services in or outside Malta without a license from the Malta Financial Services Authority.

Requirements for the company

Service providers must meet the following requirements before applying for and obtaining a license to exchange cryptocurrency.

  • The applicant’s minimum statutory capital should be 730,000 euros.
  • The applicant company has a physical office in Malta.
  • Director, top management of the company, KYC/AML officer must comply with the requirements of the regulator
  • At least two persons must hold the positions of directors or board of directors of the company.
  • Presence of AML/KYC officer

Financial licences are divided into four classes. Cryptovirges fall into the fourth category, which covers all provisions of VFA service and the control or storage of clients’ funds in connection with the provision of VFA service.

Filing fee

Upon application for a cryptocurrency licence in Malta, the company is required to pay a duty of 24,000 euros.

Requirements

A licensed cryptocurrency company, which assumes the custody of clients’ funds, must appoint a custodian – a credit organization or a bank. All items must be stored in FIAT.

Protection of clients’ assets

Each VFA exchange must implement management mechanisms to protect its clients’ assets. The VFA Exchange must appoint an official with sufficient skills and authority to be responsible for matters related to compliance and obligations to protect the assets of clients.

Taxation of cryptocurrency companies in Malta

The profits derived from cryptographic activities are the profits of the company. The corporate profit tax on a cryptographic company in Malta is 35 per cent and is paid to the relevant tax authorities by the licensee on the profits derived from the provision of services. It is important to note that a number of tax exemptions can be applied in each specific case, thereby reducing the corporate tax payable.

Reporting requirements

Licensed cryptocurrency companies are required to provide an external auditor’s report at least once a year under section 50 (6) of the VFAA Act. The fee for processing the system audit report in MDIA is EUR 3,000.

Annual license fee

The cost of a cryptocurrency exchange licence in Malta also includes an annual surveillance fee. A company holding a cryptocurrency license must pay an annual surveillance fee to MFSA, which will depend on the revenue received by the licensee as follows:

  • with a maximum of €1,000,000, the annual supervisory fee will be €50,000.
  • with a profit exceeding €1,000,000 – an additional €5,000 for each €1,000,000 profit.

To date, fewer than 20 companies have received cryptocurrency licences in Malta.

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