A Regulatory Reset: Estonia's Crypto Landscape Undergoes Significant Transformation
In a move that marks a significant shift in the Estonian cryptocurrency landscape, a majority of the crypto companies operating under the nation's previously favorable regulations have either lost or relinquished their licenses. As per recent figures released by Estonia's anti-money laundering bureau, only 100 businesses
In a move that marks a significant shift in the Estonian cryptocurrency landscape, a majority of the crypto companies operating under the nation's previously favorable regulations have either lost or relinquished their licenses. As per recent figures released by Estonia's anti-money laundering bureau, only 100 businesses now hold the authorization to offer digital-asset services, a drastic reduction from the former tally.
The Financial Intelligence Unit (FIU) of Estonia announced earlier this week that out of the numerous authorizations once granted by the Estonian government to virtual-asset service providers, 389 are no longer valid. As of May 1, 2023, only 100 active authorizations remain.
Estonia, with its business-friendly climate, had emerged as a magnet for hundreds of crypto firms. However, the landscape shifted dramatically when Estonia enforced amendments to the Money Laundering and Terrorist Financing Prevention Act in March 2022, which included stricter capital requirements for wallet, exchange, and custody platforms.
The licenses were either revoked by the FIU or relinquished by the license holders themselves. "Following the entry into force of the enhanced requirements...service providers abandoned nearly 200 authorizations. In addition, the FIU revoked almost the same number of authorizations due to non-compliance," the agency clarified.
FIU Director, Matis Mäeker, commented on the irregularities uncovered during the renewal process of authorizations. The FIU identified instances where individuals on managerial positions were unaware of their appointments and others where professional resumes were falsified. The regulatory body also highlighted identical business plans submitted by several companies and the lack of any connection to Estonia, violating another new requirement.
Mäeker further elaborated, "In the applications, we found very many suspicious circumstances on various topics. This calls into question the credibility of the companies that wanted to do business here — their actual desire to provide services in Estonia or, vice versa, shows the desire of certain persons to use the Estonian economic and financial system for illegal activities."
The FIU affirmed its commitment to continue reviewing authorizations and exercising continuous supervision in the field of money laundering and terrorist financing prevention. "This is the only way to identify certain deficiencies," the bureau stated. When Mäeker assumed his post in the summer of 2021, there were almost 650 licensed crypto-service providers in Estonia, indicating the scale of the regulatory reset.
This shift in the regulatory landscape signifies Estonia's determination to tighten its grip on the burgeoning crypto industry. While this development may deter some businesses, it also sets a higher standard for crypto-related services, reinforcing the country's commitment to maintain the integrity of its financial ecosystem in the face of emerging challenges.