By
Tolu Ajiboye
April 23rd, 2024
Digital asset service providers already registered under the FIU will have to apply for new licenses with the FSA before the end of next year.
The Estonian government has approved a new law to regulate cryptocurrency service providers in the country.
According to a recent report from a local news outlet, the bill still needs to receive a regulatory nod from the country’s parliament before being implemented. The Estonian Riigikogu will have a chance to vote for or against the law.
Estonia to Implement New Crypto Regulation in 2025
Currently, Estonia’s digital asset services providers are supervised by the Financial Intelligence Unit (FIU). The agency demands that all crypto service providers in the country be duly registered to comply with the Anti-Money Laundering (AML) rules before servicing their customers in the region.
However, with the upcoming bill, the FIU will no longer have the authority to regulate the companies as the law has transferred the power to the Financial Supervision Authority (FSA).
The FSA will begin issuing new licenses once the parliamentary system approves the law in 2025.
Digital asset service providers already registered under the FIU will have to apply for new licenses with the FSA before the end of next year.
“If these firms wish to continue to operate, they will comply with the necessary requirements, and I believe that anyone who takes this seriously and wishes to provide a service will also be able to obtain a new license from the Financial Supervisory Authority,” said the Estonian Finance Minister Mart Võrklaev.
Estonia to Impose Stricter Regulation
Võrklaev said he submitted the bill to the government last week and is now awaiting the parliament’s decision. The finance minister also stated that the regulation aims to strengthen the country’s AML regulations.
Under current national law, fines for AML violations can reach up to 40,000 euros ($43,450). However, if the new bill becomes law, defaulters could pay up to 5 million euros ($5.2 million). The changes are part of Estonia’s ongoing efforts to combat money laundering and terrorist financing.
Additionally, the legislation would modify the securities prospectus requirement to further enhance the country’s regulatory framework for crypto assets. The bill aligns with the upcoming European Union’s Markets in Crypto-Assets (MiCA) regulations, which seek to regulate the crypto market more comprehensively.
Estonia has been known for its crypto-friendly stance since 2017, when it introduced favorable legislation for crypto companies and simplified registration processes, including the innovative e-residency program.
However, the country faced criticism and tightened regulations in 2020 following a non-crypto-related corruption scandal.
Meanwhile, while commenting on the new law, Peter Koppel, an economic analyst, said the bill is a step forward in “cleaning up” the crypto market in Estonia.
“It is simply a step towards cleaning up the environment. It does not change the substance of anything, at least for me and, I think, for the average speculator and the non-investor, because you cannot invest in crypto. It only makes the environment a little bit better, a little bit more reliable,” he said.