The statement brings with it a sigh of relief, as the country’s crypto community was concerned about a supposedly blanket ban on digital assets.
The Estonian Ministry of Finance has made it clear in a statement that it does not intend to crack down hard on cryptocurrencies. The statement is a response to a bill designed to monitor the activities of virtual asset service providers (VASPs) to combat financial crime.
The law is to be discussed in the country’s parliament before a decision is made on its approval. Those who invest or trade cryptocurrencies with their private wallet are not affected by the regulations as implied in previous reports.
“…The legislation does not contain any measures to prohibit customers from owning and trading virtual assets and does not in any way require customers to disclose their private keys to wallets”, says the statement.
The Ministry also published an FAQ page yesterday, which contains answers to the inquiries about the proposed bill. The ministry stated that the legislation is the implementation by the country of the recommendations of the Financial Action Task Force on VASP regulation.
Tightening of AML regulations
Despite a good start, the cryptocurrency sector in Estonia has suffered several setbacks over the past three to four years. Most of the licenses issued to companies in the cryptocurrency niche have been revoked. Last year alone, more than 1,000 crypto companies lost their licenses due to poor connections to Estonia, according to the Financial Intelligence Unit (FIU).
This was done after the alleged discovery that hundreds of billions of USD were laundered through Danske Bank. The director of the FIU, Matis Maeker, previously claimed that all licenses should be revoked, which forced the companies to restart the application process. However, the spokesman of the unit published a statement to the contrary, in which he noted that the original statement did not reflect the opinion of the European Union.
The proposed anti-money laundering rules stipulate that VASPS approved in Estonia must have a branch or have a close connection with the country. The requirements for VASPs also include increased capital requirements, which are likely to serve to keep most providers away. The service providers must have a share capital of 125,000 € (about 142,000 USD) to 350,000 € (approximately $ 396,000), with the exact amount being determined by the respective services. This corresponds to about ten times the current minimum share capital of 12,000 € (about $13,500).
The ministry further clarified that decentralized financial applications are not inherently recognized as VASPs. However, it warned that “Developers, owners or other persons who benefit from such applications in monetary terms” could have similar obligations as VASPs.
If the Estonian legislature gets the green light, the new guidelines will also require VASPs to keep information about users who want to open accounts or wallets. This know-Your-Customer (KYC) requirement for VASPs will complement the existing law against opening anonymous virtual accounts.
“Accounts opened with Estonian VASPs cannot be anonymous and Estonian VASPs cannot offer anonymous nodes or wallets”, it is stated in part of the statement.