Regulator in Estonia penalizes crypto companies
The blockchain and crypto industry has been going through a tough time lately, with many governments around the world increasing their regulations on this sector. One such government is that of Estonia, where the authorities have been extremely strict, leading to a significant reduction in the number of licensed crypto service providers. In this article, we will take a closer look at the reasons behind Estonia’s crackdown on crypto companies.
1. The background to Estonia’s anti-money laundering measures
The Estonian government’s increased regulations on the blockchain and crypto industry have come as a result of the rise in money laundering activities on these platforms. Criminals have been using this industry for their illegal activities, which has made it even more important for the government to take measures to prevent this. As such, the Estonian Financial Intelligence Unit (FIU) has made it more difficult for money launderers to use these platforms to launder funds. The FIU has made it mandatory for crypto companies to monitor the origins and destinations of all transactions, as well as the identity of their customers.
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2. New rules for crypto companies in Estonia
CoinDesk reports that Estonia’s government believes that crypto companies need to start acting more professionally. These firms must hold more capital and be active as a company within Estonia. This new requirement means that crypto companies must have employees within Estonia. The government has made it clear that it will no longer tolerate “hippie-like” crypto projects that are not meeting regulatory requirements.
3. Consequences of the new regulations
The Estonian government’s strict stance on crypto companies has led to a significant reduction in the number of licensed service providers. As of May 1, only 100 companies were licensed in Estonia, which represents an 80% decrease in the number of licensed crypto service providers. Almost 200 companies withdrew their licenses, and the FIU also revoked about 200 licenses because they did not meet the requirements. The offshoring of crypto firms to other countries has been seen as a significant issue, which has led to bankruptcies of companies such as the Belgian Bit4You, who was a customer of an Estonian company that lost its license.
4. Regulations in the European Union
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Estonia is a member of the European Union, which means it will soon have to comply with the Markets in Crypto-Assets (MiCA) legislation. While these laws are generally viewed as constructive for the crypto industry, the Estonian government has taken it a step further to regulate this sector, making it a significant challenge for crypto companies based within its jurisdiction.
Overall, Estonia’s stricter regulations indicate that many governments around the world are taking the blockchain and crypto industry more seriously. The rise in money laundering activities on these platforms has led many governments to take measures to prevent this, and Estonia is just one of many nations taking a more rigorous approach to regulation. Crypto companies that want to succeed in this industry must be prepared to adapt to changing regulations and demonstrate their professionalism to the authorities.