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Trans-border transactions, virtual IDs, digital money. The idea of business-driven “paperless” society appeared to be infectious for this Baltic state. Yeah, you guessed right: we are talking about Estonia — a global ICO hub and the first country in the world that built a digital infrastructure for business.
Let’s continue exploring the diverse crypto world in our column: The World CryptoMap.
With free wireless Internet on almost every street, a friendly business environment, low taxes and a progressive community, Estonia aims to become the best option globally for startups.
Perhaps, there is no place in the world where it would be easier to establish a business. Estonia’s E-residency registration program is conducted online and takes about 30 minutes to complete. “Hold on: an e-what?” you may ask. For the sake of clarity — E-residency is a scheme that allows any investor from any country to run a business in Estonia. Once admitted, E-residents are given government-issued digital IDs, can open Estonian bank accounts and get access to the same online public services that domestic citizens use. Moreover, no physical presence is required.
There are currently more than 40,000 e-residents registered. The data is public and updated in real time. The population of the E-residency not only include freelancers, independent, and remote workers, but also investors, CEOs, and even prime ministers. Japanese prime minister Shinto Abe was the first.
To better understand where it all started, let’s take a look back. 1991. Estonia had just won independence from the Soviet Union and was in the early stages of building a market-oriented economy from scratch.
Fortunately, the government leaders were quick to recognise the potential of the Internet and were open to experimenting. Having pioneered a range of initiatives, from implementing electronic medical record system to establishing a digital infrastructure for business, Estonia has become one of the most attractive locations for international startups. According to Deloitte’s cost-benefit analysis, in 2017 e-residency program has brought Estonia an income of €14.4 million.
While many countries remain divided on whether or when to develop legal frameworks that would prevent the crypto market from fraud, Estonia has passed a piece of legislation that aims to regulate cryptocurrency trading back in 2017.
According to the new wording, businesses that would like to offer “cryptocurrency exchange and storage services” are required to obtain a licence from the Financial Intelligence Unit. Meanwhile, conducting such operations without official authorisation is a criminal offence.
The regulation particularly favor cryptocurrency investment as they are not subjected to VAT tax. If a startup wants to get incorporated in Estonia, all they have to pay is usual business taxes.
But this is just the beginning.
In a bid to become a global hub for ICOs, Estonia is now moving ahead with plans to launch its own crypto token, the estcoin. Estonia’s e-Residency program managing director Kaspar Korjus explained, the coin is not intended to provide “an alternative to the euro”. What’s being proposed isn’t a coin (like Bitcoin), but a digital token which would used as a reward for promoting or improving the e-Residency scheme.
There are hardly a few countries that have achieved Estonia’s openness to blockchain oriented companies. With its E-residency program and positive attitude towards international ICOs, Estonia is striving to be at the forefront of the crypto industry.
The government of the country often reiterates its willingness to welcome foreign investors, which means that companies will continue to seek incorporation in the European country.
Should Estonia begin issuing its own crypto tokens to e-residents? What do you think the impact of these coins could be, both for Estonia and the global crypto community?
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