Estonian Government Passes Crypto Regulation Bill

The Estonian government has approved a law allowing monitoring of cryptocurrency service providers, aligning with EU regulations.

The Estonian government has given its approval to a law that will provide them with the authority to monitor cryptocurrency service providers.

The Markets in Crypto-Assets (MiCA) laws of the European Union are compatible with this legislation, which links the nation’s financial oversight with those regulations.

However, for the bill to become law, it must first be voted on by Congress. The proposed bill will establish a robust regulatory framework by shifting the responsibility of monitoring cryptocurrency service providers from the Financial Intelligence Unit (FIU) to the Financial Supervision Authority (FSA).

When the Financial Intelligence Unit (FIU) was in charge of registering Bitcoin service providers, the primary focus of this activity was on ensuring compliance with anti-money laundering (AML) regulations.

The transition to supervision by the Financial Services Authority (FSA) therefore entails a change to the more extensive regulation of the cryptocurrency business.

The Financial Services Authority (FSA) will begin issuing licenses to bitcoin service providers starting in 2025. As a result of this modification, the Estonian government has demonstrated its determination to increase monitoring and ensure that service providers comply with stringent regulatory standards.

Furthermore, in the new regulatory structure, organizations that are already in possession of a FIU license will be required to obtain an FSA license by the time the year 2025 comes to a close.

The interim period makes it easier for enterprises to gradually adjust to the new regulations, giving them sufficient time to fulfill the required standards.

The bill provides for a significant increase in the penalty for anti-money laundering (AML) infractions, with penalties rising from the previous ceiling of 40,000 euros to a maximum of 5 million euros.

Estonian Government Fight Against Malpractice In Crypto Sector

The increase in potential penalties through this measure highlights the Estonian government desire to ensure compliance and discourage malpractices within the cryptocurrency sector.

The purpose of this bill is to bring the regulations governing the cryptocurrency market in Estonia into conformity with the Markets in Crypto-Assets (MiCA) regulations that are in place in the European Union.

Estonia is hoping that by taking these measures, it will be able to establish a consistent approach to regulating cryptocurrencies throughout the member states of the EU.

Furthermore, the measure alters the securities prospectus obligation by raising the bar for businesses that wish to obtain capital by selling bonds or shares.

This modification aims to make the situation easier for companies by making it less complicated and more affordable for them to get funds.

Additionally, the move is intended to encourage the expansion of Estonia’s capital market. Estonia has been a pioneer in integrating cryptocurrencies, producing a crypto-friendly ecosystem beginning in 2017.

This was accomplished by drafting favorable regulations for crypto firms and streamlining cryptocurrency registration procedures. On the other hand, the Estonian Government has demonstrated that it is interested in having excellent monitoring, as evidenced by the fact that it revoked the licenses of many cryptocurrency companies in the year 2020 for failing to comply with operating criteria.

Following Estonia’s strategy of bringing together the provisions of adequate regulation and monitoring with the innovation that occurs in the bitcoin industry, the new bill has been introduced.

In light of this, Estonia is well-positioned to build a cryptocurrency market that is safer, more dependable, and more transparent.

This will be accomplished by transferring the regulatory obligations to the Financial Supervision Authority and harmonizing with legislation applicable across the entire EU.