Nikolas Sargeant
Estonia's government has greenlit a landmark legislation transferring oversight of the crypto industry to the Financial Supervision Authority (FSA) by 2026. This move, aimed at regulating the burgeoning crypto market, entails stringent operational and reporting standards for local crypto service providers.
As outlined in reports from local media on Thursday, the pending law seeks to enhance oversight and accountability measures within the crypto sector. However, it awaits a parliamentary vote before formal enactment.
By placing crypto firms under the purview of the FSA, Estonia anticipates bolstering its ability to combat financial crimes such as crypto-related bankruptcies and cyber thefts. Matis Mäeker, head of the Financial Intelligence Unit (RAB), emphasized the shift toward comprehensive financial supervision for crypto businesses, departing from a prior focus solely on anti-money laundering (AML) regulations.
Mäeker elucidated, likening crypto businesses to banks entrusted with managing client deposits. Accordingly, they must adhere to stringent protocols for safeguarding client assets and ensuring liquidity.
Moreover, Finance Minister Mart Võrklaev underscored the imperative for crypto enterprises to secure licenses from the FSA by 2026. He affirmed that, come 2025, the issuance of licenses would fall exclusively under the jurisdiction of the Financial Supervisory Authority. Additionally, entities holding licenses from the Financial Intelligence Unit must procure new licenses from the FSA.
Furthermore, the legislation proposes significantly heightened penalties for AML violations, with fines potentially reaching up to 5 million euros ($5.2 million), a stark contrast to the current cap of 40,000 euros ($43,450).
Estonia's Role in the Global Crypto Landscape
Estonia stands out among nations for its early embrace of cryptocurrency and its enduring commitment to fostering a conducive regulatory environment. If ratified, the bill would align Estonia with the European Union's Markets in Crypto-Assets (MiCA) regulations, slated to take effect this year.
With its progressive legislative framework, favorable tax policies, streamlined licensing procedures, and robust fintech ecosystem, Estonia has emerged as a premier destination for crypto ventures seeking a competitive advantage.
However, Estonia has also grappled with the dark side of the crypto realm, falling prey to significant-scale fraud and scams. An investigative report unveiled that international crypto criminals have siphoned or defrauded victims of over €1 billion (1.05 billion euros).
