Anyone interested in entrepreneurship and cryptocurrencies already knows the one country that is always named when talking about crypto-businesses: Estonia.
The North-European country, whose population and size are comparable to the State of Maine, has successfully made the crypto world pin it on their map.
The Estonia cryptocurrency license was early. It was the first one to be white-labelled. It was the first one to get enough feedback to evolve, after 3 years of running the framework. Estonia hosts hundreds of cryptocurrency companies and is considered the benchmark.
Back in 2017, your company could get an e-wallet license or a cryptocurrency trading license in Estonia, or both. In 2020, the innovating Estonian regulators blended the two into a single blockchain license. Estonia wanted a stronger framework after money laundering scandals in a domestic bank. Following up on the FATF recommendation, the updated framework put an emphasis on AML-KYC.
Is the Estonian cryptocurrency license still interesting in 2022?
With the emergence of new licenses and the openness to crypto-related businesses in many countries at once, is the Estonian license still a good opportunity?
We are observing a division on the “market” of regulations. As new ventures pop up from all over the world, with very different business models, increasingly touching on the matters of DeFi and NFTs, the regulatory side is not one-sided anymore as well.
The Estonian framework was designed to monitor and legitimize the purchase and sale of cryptocurrencies, as well as thecustody. It is therefore best suited for centralized exchange, but can fit other kinds of services as well. The white-label nature of the framework brings a considerable benefit: as it is straightforward and replicable, the licensing fee and the operation-related costs are relatively low. Whatever your business model, Estonia most likely will show up as one of the best three options for registering your crypto company.
How does one get the cryptolicense in Estonia, without ever going to Estonia?
As long as you cooperate and agree to set a substance in Estonia, you will never be required to visit the country. Estonia, before even becoming renowned as a crypto-friendly place, has set most of its services online. For a business-owner, this means doing tax, editing the company and signing official documents from your computer, wherever in the world.
But you noted it: you have to set some substance in the country. This means, concretely speaking, that to get the cryptocurrency license for your Estonian company, you need to rent or own a physical space in the country. A local director should be appointed, which is the opportunity for the remote entrepreneur to have a brain and a pair of hands onsite. Finally, as per the FATF recommendations, any crypto company in Estonia has to appoint an AML officer, whose job is to ensure compliance of KYC processes and to report suspicious transactions.
This requirement for substance is a bit of additional work and comes with the cost of rent and employment. These added measures in 2020 have barred the road to the least wealthy crypto entrepreneurs, who are now looking into other places for establishment.
What is the process to get the Estonian cryptocurrency license?
The license is only granted to companies registered in Estonia, so this is square number one. With the IT infrastructure described above, it is possible to register a company in Estonia from anywhere in the world, given you can provide documents proving your identity.
Once the company is set, it’s about time to set the substance that we talked about in the previous part of this article: premises and local workers.
Substance is also about financial subsistence, and the Estonian law requires you to deposit EUR 12,000 in a bank account located in the European Union. The upside is that this money can be used for business once the license has been granted. It’s not locked in.
Afterwards, an application for license has to be completed and sent to the Estonian Financial Intelligence Unit. Having a clear and striking business plan is often helpful in getting your project green-lighted effectively. Be prepared to demonstrate your AML-KYC procedures and policies as well, it can make or break the success of the licensing process.
Saving time, energy and possibly money on the licensing process — a few tips
The best thing you can do is to acknowledge the requirements and to be prepared. You will be interrogated about the people involved so prepare notarized passports and a resume of all your team. You will need to set the substance in Estonia and to demonstrate your ability in applying the AML and KYC rules.
Experience shows that the whole process is much simpler and free of mistakes when conducted with the assistance of a licensed corporate service provider, such as LegalBison and it’s 100% success rate in setting cryptocurrency licensedcompanies in Estonia.
Poloniex rolled back support for stablecoins on Binance Smart Chain (BNB Chain)
Crypto exchange Poloniex (one of the key investors of which is the creator of the ecosystem TRON Justin Sun) stopped supporting stablecoins on Binance Smart Chain (today – BNB Chain). Poloniex tech support announced this in a tweet.
Tech support later deleted the tweet, but it is still viewable on the websites that linked to it. When trying to open an announcement about the termination of support for Binance Smart Chain stablecoin, the exchange’s website takes you to an authorization form.
According to the saved copy of the announcement, the exchange stopped supporting USDT, USDC, TUSD and BUSD based on the BEP20 protocol back on November 24. However, support for other BNB Chain-based tokens remained in place.
The exchange said that it stops not only deposits but also withdrawals of stablecoins on BEP20, but is ready to convert assets to their counterpart on other networks: Ethereum (ERC20) or TRON (TRC20). It is not clear what exactly caused the change. At the same time, Poloniex representatives on Telegram ignore users’ questions about the reasons for stablecoin support stopping on BEP20, but note that users can still deposit tokens on BEP20.
Earlier, we reported that MakerDAO will exclude renBTC from DAI stablecoin reserves due to the drop in renBTC price.
Binance Launches Proof-of-Reserves System
Binance has released a Proof-of-Reserves system based on Merkle Tree, an algorithm for verifying crypto exchange reserves. The Proof-of-Reserves system proves that the company holds user funds in full. When a user deposits one bitcoin, the exchange’s reserves increase by one bitcoin in real time, proving the transparency of balances and the safety of funds.
The first version of Proof-of-Reserves is available for bitcoin (BTC). Similar functionality will soon be available for ETH, USDT, USDC, BUSD and BNB. Binance will also bring in an independent third-party auditor to verify the data.
“Given recent events, it is clear that the community will demand more from crypto exchanges than what is currently required of traditional financial institutions. That’s why we are excited to provide our users with this newest feature to verify crypto exchange reserves,” said Binance CEO Changpeng Zhao.
He added that Binance’s community is larger than that of any other crypto exchange. Therefore, it will take several weeks to get data for most assets.
“We are working to get the next update out as quickly as possible. As much as possible to meet community expectations,” Zhao noted.
Right now, users can check funds in two ways: through the Binance website or by copying the source code into a Python application and cross-referencing.
Also, the ZK-SNARK tool will soon be introduced, providing privacy and simplicity for confirming reserves. The service will help audit users’ balances and confirm that they have assets to cover collateral.
Earlier, we reported that New York City restricted the cryptocurrency mining business.
Polkadot offers money for fighting crypto fraudsters
Blockchain project Polkadot has launched Anti-Scam Bounty, an anti-crypto fraudsters program to improve the security of its ecosystem. As part of the new program, Polkadot will pay users cash rewards for helping them fight crypto fraudsters.
Users are required to find fraudulent websites, fake social media profiles and phishing apps that masquerade as Polkadot. They also need to protect Discord servers from hacker attacks. The tasks include creating training materials for users, as well as developing a special Anti-Scam toolbar to protect against fraud in the company’s ecosystem.
“Decentralizing anti-cryptocurrency scammer list efforts and moving them online is no easy task, mainly because most of the anti-scamming happens in Web2,” Polkadot said in a statement.
Each task is overseen by members of the Polkadot community. They will interact with implementers and suggest their own initiatives to better achieve results. Users will receive USD Coin (USDC) awards for helping to fight fraud. The program is now run by three mentors from the Polkadot community and two employees from the Web3 Foundation.
“The threat to Polkadot’s brand development is real, but that’s not our only concern. We don’t want Polkadot to be a free ecosystem. We want it to be a secure ecosystem where users don’t have to constantly worry about getting caught and scammers should think twice before casting their nets,” Polkadot said.
Polkadot concluded by reaching out to scammers, promising that they will have a tough time in the ecosystem.
“So pack your bags and go for it. Or better yet, get a job and stop stealing from people!” the authors of the release concluded.
We previously reported on why the collapse of FTX won’t kill the crypto industry.
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