KEY POINTS
According to reports from the national media, the Estonian government has approved a bill intended to oversee cryptocurrency service providers. However, the bill must gain parliamentary approval, which is underway.
FSA to Assume Regulation Role
The suggested legislation would subject crypto service providers to the oversight of the Financial Supervision Authority (FSA). Currently, the Financial Intelligence Unit (FIU) registers cryptocurrency service providers and mandates them to adhere to Anti-Money Laundering (AML) regulations and stay away from financial mischief or misconduct.
Mart Võrklaev, the Finance Minister of Estonia, believes that any reputable service provider should have the ability to obtain a new license from the FSA. The maximum fine for AML violations is 40,000 euros ($43,450) but the new law could see fines soar up to 5 million euros ($5.2 million).
Previously, firms looking to raise more than 5 million euros through shares or bonds had to prepare a detailed prospectus, a time-consuming and costly process. The new law raises this threshold to 8 million euros ($86.9 million).
Estonia’s Crypto Regulation Journey
In 2017, Estonia established itself as a crypto-friendly nation by passing legislation that favored crypto firms and simplified registration. However, the country was forced to adopt and implement stringent measures to regulate the cryptocurrency space in 2020 following a major corruption scandal unrelated to crypto.
In 2020, Estonia revoked 500 crypto company licenses issued by the FIU because the companies did not initiate operations within six months of registration in the country. Following months of police investigation, the number of licensed crypto firms in Estonia dropped from 1,234 at the end of 2019 to 353 in September 2020.
