MiCA CASP License in Estonia

The benefits of choosing Estonia for registering a MiCA-licensed Crypto Asset Services Provider (CASP)

Among all the European member states, Estonia stood out in the past decades for its liberal economy. Famous among entrepreneurs thanks to it’s 0% corporate income tax and for the high digitization of its services, Estonia was also the first country to formulate a framework for crypto companies. The first Estonian crypto license in 2017 attracted such an amount of entrepreneurs and investments that a whole industry of corporate services providers was born as a consequence, to assist with the proper set-up of legal entities in Estonia and the conduct of crypto businesses. LegalBison, as an Estonian entity, has its root in this story of successfully attracting industry trailblazers in the country.

Nowadays, Estonia surely benefit from the reputation of having incentivized entrepreneurs and crypto companies. The framework changed, but the 0% tax on undistributed profits remains, and the online infrastructures as well.

When MiCA came out, the Estonian authorities took the matter at hand pretty fast and the country was the first to be able to enforce MiCA. It helped that the latest Estonian VASP framework was used as one of the basis of work to actually produce the MiCA regulation. As a consequence, existing Estonian VASPs benefit from the longest possible grandfathering period, of 18 months. This shows Estonia being simultaneously confident in its former framework and being on time with the new MiCA framework. A positive sign to crypto entrepreneurs willing to go for a MiCA license in a jurisdiction that has it figured out from day one.

How to apply for a CASP MiCA license in Estonia?

Applying for an Estonian CASP license to the Estonian Financial Supervision and Resolution Authority (ESFRA) is a straightforward process. There are few steps and they are comprehensive. However, the preparation underlying each stages should not be underestimated. A MiCA license, especially in an experienced crypto licensing country such as Estonia, requires minute planning and the involvement of highly qualified individuals for compliance with the regulation.

We laid out a more detailed explanation of the process, further down this page.

The main things to remember is that a MiCA license in Estonia can be granted to an Estonian company who carries out a complete application file, composed of all the necessary requirements and information set out by the regulation.

National Competent Authority for MiCA enforcement in Estonia

The National Competent Authority (NCA) in Estonia for the enforcement of the MiCA regulation is the Estonian Financial Supervision and Resolution Authority (ESFRA), also known in Estonian language as the Finantsinspektsioon (FI). The ESFRA is an independent public supervisory body acting on behalf of the Estonian State, whose role is to carry out supervision over banks, insurance companies, insurance intermediaries, investment firms, fund managers, investment and pension funds, payment institutions, e-money institutions, creditors and credit intermediaries, crowdfunding service providers, debt collection agencies, and the crypto-asset and securities markets.

Grandfathering right for existing VASP licensed companies in Estonia

Existing Virtual Asset Services Providers licensed under the previously existing regulation in Estonia are allowed to continue operating for a maximum of 18 months, until July 1st of 2026. The former Estonia VASP license was one of the basis for reflection for the MiCA regulation, therefore the Estonian regulator is still confident in the viability of their previously licensed entities.

This information only pertains to existing and active Virtual Asset Services Providers. If you operate such a licensed entity and are confused about how to upgrade to a CASP license in due time, we invite you to contact our legal experts and to acknowledge our article on the MiCA requirements.

Setting up a company for a cryptocurrency business in Estonia

Setting up an Estonian limited liability company (OÜ, osaühing) is fast and easy thanks to the digitization of processes in Estonia. A lot of crypto entrepreneurs and others have been able to open their Estonian company from the comfort of their homes.

Done remotely, the incorporation process in Estonia still requires the notarization or Apostille of the identity documents of the board members. Once this administrative requirement is fulfilled, the process is streamlined and quick. The applicant shall decide on a company name and provide contact details. Note that the set-up of a compliant crypto asset service provider (CASP) in Estonia requires the addition of legal services, that we offer in packaged offers (see below).

Banking for a CASP licensed company in Estonia

A MiCA license is a big help when it comes to opening a bank account. As the new regulation imposes very strong compliance requirements on CASPs, it also raises the level of trust of banking institutions for licensed entities. Subsequently, banks in Estonia that used to be friendly with VASPs at some point in the past are now likely to consider working with crypto companies again.

The process of opening a bank account for a CASP in Estonia is the same as it used to be for VASPs in the past. However, the successful application for a CASP license will definitely help, as it is that much proof that the company applies a strong level of due diligence and is actively preventing financial crime.

Taxation for cryptocurrency companies in Estonia

Estonia has one of the most advantageous corporate tax rates among non-tax havens and so called offshore jurisdictions. Revenue generated by Estonian companies are not taxed (0% corporate income tax), as long as they are not distributed (that means paid either as a salary or a dividend payment).

Dividends are taxed at a rate of approximately 20%. Beforehand, the participants of an Estonian crypto licensed company should make sure that their country of fiscal residency has a double tax treaty with Estonia. A tax lawyer shall better advise them on how to properly transfer generated wealth to their personal accounts.