Estonia Introduces New Bill for Cryptocurrency Service Providers
The Estonian government has given its approval to a bill that aims to regulate and oversee cryptocurrency service providers in the country. This move is in line with the European Union’s Markets in Crypto-Assets (MiCA) regulations, which seek to harmonize cryptocurrency regulations across member states. However, the bill still needs to undergo a parliamentary vote before it can become law.
New Supervisory Framework for Cryptocurrency Service Providers
The proposed bill will establish a robust regulatory framework by transferring the oversight of cryptocurrency service providers from the Financial Intelligence Unit (FIU) to the Financial Supervision Authority (FSA). Previously, the FIU was responsible for registering cryptocurrency service providers and ensuring compliance with Anti-Money Laundering (AML) measures.
- This shift to FSA supervision signifies a more comprehensive regulation of the crypto industry.
- Starting in 2025, the FSA will begin issuing licenses to cryptocurrency service providers.
- This change demonstrates Estonia’s commitment to strengthening supervision and enforcing strict regulatory requirements on service providers.
In addition, existing entities with an FIU license will need to obtain an FSA license by the end of 2025. This transitional period allows businesses enough time to adapt to the new rules and meet the required standards.
- The bill also introduces significantly higher fines for AML violations, with penalties increasing up to 5 million euros.
- This increase in potential penalties highlights the Estonian government’s determination to enforce compliance and discourage malpractices within the cryptocurrency sector.
Aligning with European Union Regulations
The bill is specifically designed to align Estonia’s cryptocurrency market regulation with the European Union’s MiCA rules. By doing so, Estonia aims to ensure a consistent approach to cryptocurrency regulation among EU member states.
- The bill also modifies the securities prospectus obligation, raising the threshold for companies that want to raise funding through shares or bonds.
- This change aims to make it easier and more cost-effective for businesses to obtain funds, while also promoting the growth of Estonia’s capital market.
Estonia’s Approach to Crypto Regulation
Estonia has been at the forefront of integrating cryptocurrencies into its financial system. Since 2017, the country has created a crypto-friendly ecosystem by implementing favorable laws for crypto companies and streamlining registration procedures.
However, Estonia has also demonstrated its commitment to strong oversight by revoking licenses of several crypto companies in 2020 due to non-compliance with operational requirements. The new bill is part of Estonia’s efforts to strike a balance between fostering innovation in the cryptocurrency industry and implementing sufficient regulation and surveillance.
Through the transition of supervisory responsibilities to the Financial Supervision Authority and alignment with EU-wide regulations, Estonia aims to establish a safer, more reliable, and transparent cryptocurrency market.
Hot Take: Estonia Takes Steps Towards Regulating Cryptocurrency Service Providers
Estonia’s approval of a new bill for overseeing cryptocurrency service providers marks a significant step towards strengthening regulation in the crypto industry. By transferring supervisory responsibilities from the Financial Intelligence Unit to the Financial Supervision Authority, Estonia aims to ensure comprehensive oversight and compliance with regulatory requirements.
The alignment with the European Union’s MiCA regulations further demonstrates Estonia’s commitment to harmonizing cryptocurrency regulations across member states. This move will help create a consistent approach to crypto regulation within the EU.
Overall, these measures reflect Estonia’s determination to foster a secure and transparent cryptocurrency market while promoting innovation and growth in the industry.
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