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Estonian local quirks when preparing current setups to apply for a MiCA license in Estonia


local quirks

To apply for MiCA license in Estonia by the end of 2024, current business might face some local quirks. According to Crypto Asset Market Law draft (KrüTS in Estonian), these are:

 

  • Mandatory three-person council

  • Two management board members (minimum)

  • Mandatory financial audit

  • Fines for breaches ranging 700 000 – 15 000 000 EUR

 

1. Let’s start with the Mandatory three-person council


Currently, according to the Commercial Code, a private company does not have to have a supervisory board, in the case of a joint-stock company, a supervisory board of at least three members is mandatory.

Currently, there are at least 50 companies with a valid operating license in Estonia. Therefore, by the end of the year, there must be at least 150 people in Estonia who would like to be members of the virtual asset service provider council and at the same time meet the fit and proper requirements.

 

2. Members of the Board


Today, MLTFPA of Estonia states heightened requirements in respect of members of the management board. According to that, Members of the management board of a virtual currency service provider must possess higher education and at least two years of specialised work experience.

 

Here we see that two years of professional experience has been waived, which makes finding a board member a little easier. However, now the service provider must have at least two competent board members. Therefore, one-man companies where the same board member is also the FIU contact person will disappear once and for all.

 

3. Audit


The KrüTS explanatory letter has not addressed the problem that has arisen in 2020, meaning how many sworn auditors are able and willing to carry out the relevant work. Today's situation is such that the majority of sworn auditors lack the knowledge and experience to audit the annual reports of virtual currency service providers. At the same time, the demand for the corresponding service is growing significantly.

 

Finding auditors and raising their competence was already one of the focal points of the previous changes in 2020. After the law changes came into force, finding an auditor still turned out to be a universe-like problem.

Those who know, know!

 

Personally, it seems to me that the legislator still wants to look at the topic of auditing crypto companies in Estonia through rose-colored glasses. Why else, in the KRÜTS explanatory letter, despite the question raised and the proposal made by Finance Estonia, they repeatedly beautify the situation in a way of speaking like:

 

“We are aware that .. established the requirements for the audit of the annual report and the control of own funds are raised the question of how many chartered auditors there are who can and wish to perform the corresponding work. Audit companies themselves have an interest improve your knowledge in it in the field. Since according to the current law a calculation of own funds is mandatory, then based on the assumptions, by the time the draft enters into force, there will already be more auditors with experience and knowledge

 

I’m not sure about it at all..

 

4. Fines

 

Fines for breaches ranging 700 000 – 15 000 000 EUR

Buckle up, folks! 🚀 Self-explanatory..We're about to dive deep into the world of corporate governance.

 

As you see, the "local quirks" mentioned above are currently in the wording of the draft. There will certainly be comments from the crypto community and maybe the wording will be changed or corrected. In any case, when applying for a license, I must be ready to meet Estonia's specific requirements for crypto service providers, the purpose of which is certainly only to ensure the license holder's reliability and compliance with best practices and Estonian standards.

 


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