The Estonian Ministry of Finance has issued a statement and FAQ to calm fears of a crackdown on cryptocurrencies within the country.
The statement refers to draft legislation introduced by the Estonian government on Dec 23 that aims to “more effectively regulate virtual asset service providers (VASPs) to mitigate the risk of financial crime.” It stresses that the regulation only applies to VASPs, and does not preclude individuals from owning or trading virtual assets through their own private wallets.
“However, accounts opened with Estonian VASPs cannot be anonymous and Estonian VASPs cannot offer anonymous accounts or wallets,” the statement explains. Accordingly, VASPs must identify customers for whom they facilitate transactions, “similarly to bank transfers,” and must implement risk analysis if such information is not received. The legislation is currently pending and awaits approval from the country’s Parliament.
Crypto landscape in Estonia
Estonia saw a surge in crypto-related businesses after becoming one of the first countries to grant cryptocurrency licenses in 2017. However, roughly 2,000 licenses have been revoked since then, with only around 400 companies retaining them, following the sector coming under greater regulatory scrutiny in 2019. This was caused by allegations that billions of dollars of illicit funds had passed through the local unit of Denmark’s largest bank in 2018.
The new regulations have come in anticipation of the country’s review of its money laundering policies expected this quarter, in line with similar actions by the Council of Europe. In light of the upcoming review, Matis Maeker, the director of Estonia’s Financial Intelligence Unit (FIU), which can grant and revoke crypto licenses, had previously stated that all licenses would be rescinded, which would require companies to reapply across the board. However, his spokesman later clarified that this was not the official view of the EU and the Estonian government would not be pursuing this course of action.
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