Estonia’s government approved legislation to increase oversight of the country’s crypto sector, which has grown rapidly thanks to favorable regulations and a favorable business climate. While the new law is still being adopted, it will impose stricter requirements on service providers, but not prevent their clients from owning or exchanging cryptocurrency.
Tallinn authorities draft stricter rules for crypto service providers
Estonia’s executive has approved draft legislation “to better regulate virtual asset service provider (VASPs)” Sunday. The Finance Ministry explained that the main goal is to reduce the risk of financial crime via the registered crypto platforms operating from the Baltic country.
New regulations require VASPs that they identify customers in a way that links them to transactions. These regulations are an extension of the ban on anonymous virtual accounts that were created in 2020, after Estonia’s crypto friendly regulations attracted many license applicants.
The Ministry of Finance stated that this legislation would not apply to individuals who have virtual currency stored in a private wallet and not provided by VASPs. The legislation does not restrict customers’ ability to trade virtual assets or require them to share their private keys to crypto wallets. Estonian service providers won’t be allowed to provide anonymous accounts or wallets.
The department stressed that the measures were similar to those used for payment and banking transactions. These amendments incorporate the Financial Action Task Force on Money Laundering’s recommendations into Estonian law. These amendments define virtual asset services that aren’t currently defined in Estonian law.
Estonia raises capital requirements for crypto licensees
The new regulations require companies to be licensed in Estonia and have Estonian connections. Current rules allow the resale to third parties of Estonia-licensed businesses. This is the reason for the boom in applications. This has made it impossible to supervise such entities. Authorities noted that the new rules will allow the Financial Intelligence Unit of the country (FIU), to decline such applications.
Furthermore, regulators will raise share capital requirements for VASPs from EUR12,000 to EUR125,000 or EUR350,000, depending on the type of services. Estonia hopes that the threshold will help reduce the number dormant entities. According to the Finance Ministry, VASP licensees have an average annual turnover of EUR million euros.
Estonia declared it was working on new legislation in October. Matis Maeker (head of FIU) revealed that only one of 10 crypto companies has a bank in Estonia. He also said that the regulator may revoke all licenses previously issued to authorize a restart. The agency had already revoked approximately 2 ,000 virtual asset service providers like wallet operators and crypto exchanges, by that point.
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Lubomir Tassev, a journalist hailing from tech-savvy Eastern Europe, likes Hitchens’s quote: “Being an author is what I am rather than what it is.”
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