Estonian government tightens Crypto regulation with new bill strict legal requirements for digital asset service providers. Information according to local media reports.
Estonia Tightens Crypto Regulation
The bill is the country's attempt to regulate the cryptocurrency industry. This helps improve the reliability of this financial sector.
Estonia is already an important location for cryptocurrency service providers. It is estimated that by 2021, half of the world's cryptocurrency companies will be registered in the country.
As of 2024, this number has been reduced to around 50 by the Financial Intelligence Authority (Rahapesu Andmebüroo/RAB). This is as part of the regulatory effort mentioned above.
RAB head Matis Mäeker clarified about the upcoming changes. He pointed out that the new regulations will subject suppliers to financial scrutiny for the first time. These companies must have systems to safely manage customer assets. They need to have similarities with the functions of banks.
Under the new regime, cryptocurrency service providers will be supervised by the Estonian Financial Supervisory Authority (FSA) or Finantsinspektsioon. The program is expected to start in 2026.
New Regulations Expected to Bring Positive Reactions
The new bill imposes stricter operating and reporting requirements on cryptocurrency businesses. Fines can be up to EUR 5 million. This is a significant increase compared to the EUR 40,000 limit under the previous Anti-Money Laundering Act.
Additionally, the new regulations will require virtual currency service providers to have a license. They will be issued from 2025 by the FSA. Entities currently holding FIU licenses must apply for a new license in 2026.
The bill provides a response to many major incidents of cyber theft and corporate bankruptcy in the cryptocurrency sector in Estonia. These things have led to great losses for investors. The government wants to minimize this risk and ensure greater safety for users.
The new regulatory framework reflects Estonia's commitment to maintaining a balance between promoting financial innovation and ensuring market stability. Thereby helping to partly protect investors from risks in the fierce market.