Estonia Government Approves Bill To Regulate Crypto Service Provider
Projected Changes in Crypto Regulation
The Estonian Government has taken a monumental step as it gave its nod to a bill with the intention of regulating cryptocurrency service providers. However, it is worth noting that this is just the initial step. The bill still requires a parliamentary nod before it can be established as a law.
The proposal put forth aims to bring the digital currency service providers under the purview of the Financial Supervision Authority (FSA). At this moment, these service providers find themselves registered with the Financial Intelligence Unit (FIU) and they are expected to adhere to Anti Money Laundering (AML) regulations.
Implication of the Bill
Assuming the bill gets passed, the FSA will take the baton from the FIU and will start issuing licenses beginning from 2025. Meanwhile, existing FIU license holders will have to apply for FSA licensing before the year wraps up. Expressing his optimism, Estonian Finance Minister Mart Võrklaev believes that serious service providers will have no issues attaining the necessary licenses from the Financial Supervisory Authority.
Under the prevailing national law, the maximum penalty for violations related to AML can go up to 40,000 euros (equivalent to $43,450). However, this soon could change if the new bill is legislated. In that case, penalties can shoot up to a staggering 5 million euros ($5.2 million).
The Broader Picture
Võrklaev recently disclosed that he submitted the bill to the government last week, and the bill is now pending approval from the government. From there, it would be presented to the Riigikogu, the Estonian parliament, for a vote.
The aim of the proposed bill is twofold. Firstly, Estonia is aiming to align itself with the European Union's crypto regulations, the Markets in Crypto Assets (MiCA). Secondly, it wants to modify the securities prospectus requirement. In 2017, Estonia established itself as a crypto friendly jurisdiction by introducing favorable legislation for crypto companies and also simplifying their registration processes. This included e residency, but this policy was tightened in 2020 following a non crypto related corruption scandal..
Conclusion
In a bid to regulate service providers in the cryptocurrency sector, the Estonian Government has approved a bill. The bill provides for a shift of regulatory powers from FIU to FSA, and stricter penalties for AML violations. This impending change cuts a clear path for Estonia, aligning itself with the European Union's crypto regulations and further embracing the future of digital finance.
While there is still more hoops to jump through, this is a step in the right direction for the Estonian Government. It is a testament to the government's commitment to upholding the integrity of the cryptocurrency sector. This move could spark similar initiatives in other jurisdictions, making it a key moment to watch for stakeholders within the international cryptocurrency community.
