According to reports from state-run media, the Estonian government has given its approval to a bill that aims to regulate cryptocurrency service providers. However, the bill still needs to pass a parliamentary vote before becoming law.
Under this legislation, cryptocurrency service providers would be placed under the supervision of the Financial Supervision Authority (FSA). Currently, these providers are registered by the Financial Intelligence Unit (FIU) and are required to comply with Anti-Money Laundering (AML) rules. If the bill becomes law, the FSA will begin issuing licenses in 2025, and those holding FIU licenses will be required to apply for FSA licensing by the end of that year. Estonian Finance Minister Mart Võrklaev explained that under current national law, fines for AML violations are limited to 40,000 euros ($43,450). However, the new law would allow for fines of up to 5 million euros ($5.2 million).
Võrklaev recently announced that he had submitted the bill to the government for approval, although it has not yet been translated into English. Once approved by the government, the bill will move on to the Riigikogu, the Estonian parliament, for a vote.
This bill aims to align Estonia with the Markets in Crypto-Assets (MiCA) regulations of the European Union. It also intends to modify the securities prospectus requirement. Previously, companies seeking to raise capital through shares or bonds worth more than 5 million euros were required to create a detailed prospectus, which was a time-consuming and costly process. Under the new law, this threshold will be raised to 8 million euros ($86.9 million).
In 2017, Estonia established itself as a crypto-friendly nation by enacting legislation that provided favorable laws for cryptocurrency firms and simplified registration processes, including e-residency. However, in 2020, the country cracked down on crypto firms following an unrelated corruption scandal. As a result, 500 crypto company licenses issued by the FIU were revoked for failing to commence operations within six months of registration. The number of licensed crypto firms in Estonia dropped significantly from 1,234 at the end of 2019 to 353 by September 2020.
In October 2021, the FIU considered revoking all crypto company licenses and reissuing them. Stricter AML requirements were implemented at the end of 2021. After amending the law in 2023, nearly 400 virtual asset providers either shut down or voluntarily closed their operations.
Overall, this bill represents Estonia’s ongoing efforts to regulate and oversee the cryptocurrency industry, while also aligning with EU regulations.