Estonian Government Advances Bill to Regulate Cryptocurrency Service Providers
Summary:
The Estonian government has approved a bill to regulate cryptocurrency service providers, which now awaits a parliamentary vote. The legislation would place these providers under the supervision of the Financial Supervision Authority (FSA) starting 2025. Current license holders under the Financial Intelligence Unit (FIU) would need to obtain fresh FSA licenses by the end of that year. The proposed law would also increase fines for Anti-Money Laundering violations up to 5 million euros. The bill aligns Estonia with the European Union’s Markets in Crypto-Assets regulations and changes the securities prospectus requirement threshold, raising it from 5 million to 8 million euros.
The Estonian government has green-lit a legislation aimed at overseeing companies offering cryptocurrency services, as reported by government-owned media outlets. The proposal is yet to navigate its way through a vote in the parliament. If the bill becomes a law, cryptocurrency companies would come under the watchful eye of the Financial Supervision Authority (FSA). At the moment, these businesses are documented by the Financial Intelligence Unit (FIU) and must adhere to Anti-Money Laundering (AML) regulations. By 2025, the FSA will begin the distribution of licenses and those currently possessing FIU licenses will be mandated to request FSA licensing within the year. In the words of the Estonian Finance Minister Mart Võrklaev, "I am confident that serious-minded businesses keen on offering a service will successfully acquire a new license from the Financial Supervisory Authority." As per Estonia's existing laws, AML offences can attract a maximum fine of 40,000 euros ($43,450). This proposed law, however, has set the upper limit of fines at up to 5 million euros ($5.2 million). The legislation, which is yet to be translated into English, has been forwarded to the government by Võrklaev the previous week. Following the government's approval, it will be presented to the Riigikogu, Estonia's singular legislative house. In accordance with the European Union's Markets in Crypto-Assets (MiCA) regulations, the bill represents an effort by Estonia to align with the EU. The legislation will also alter the requirement for a securities prospectus. Earlier, businesses seeking to raise over 5 million euros in shares or bonds were required to produce an extensive prospectus - a task neither quick nor cost-efficient. Now, this benchmark will be heightened to 8 million euros ($86.9 million). In 2017, Estonia established itself as a crypto-friendly nation by passing laws in favor of crypto firms along with easy e-residency registration. However, the country toughened its stance on crypto companies in 2020 following a corruption scandal unrelated to cryptocurrencies. In that year, Estonia annulled 500 crypto company licenses issued by the FIU as they didn't initiate operations in the country within half a year of being registered. After prolonged police investigations, Estonia's tally of licensed crypto firms declined from 1,234 at the end of 2019 to merely 353 in September 2020. By October 2021, the FIU was contemplating a revocation of all crypto company licenses and re-licensing them amidst imposing stricter AML requirements towards the closing of 2021. Following revisions in the law in 2023, around 400 digital asset providers were either forced to shut down or voluntarily ceased operations.
Published At
3/22/2024 12:22:18 AM
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