Estonia shifts crypto oversight to FSA for tighter EU-aligned regulation.
Fines for AML violations in Estonia leap to €5M, enforcing strict compliance.
Estonian crypto entities are required to obtain FSA licenses by 2025 to ensure compliance with EU regulations.
The Estonian government has approved a bill that regulates cryptocurrency service providers. This legislation aligns with the nation’s financial oversight, which syncs with the European Union’s Markets in Crypto-Assets (MiCA) regulations. The bill, however, awaits a parliamentary vote to become law.
New Supervisory Framework
The proposed bill aims to establish a robust regulatory framework that will shift the responsibility of overseeing cryptocurrency service providers from the Financial Intelligence Unit (FIU) to the Financial Supervision Authority (FSA). In the past, FIU used to register cryptocurrency service providers, mainly focused on compliance with Anti-Money Laundering (AML) measures.
Thus, the transition to FSA supervision signifies a shift towards a more comprehensive crypto industry regulation. As of 2025, the FSA will commence the issuance of licenses to cryptocurrency service providers. This modification emphasizes the Estonian government’s commitment to enhancing supervision and ensuring service providers adhere to stringent regulatory standards.
Furthermore, under the new regulatory system, organizations with an existing FIU license will be required to obtain an FSA license by the conclusion of 2025. The interim stage facilitates a gentle adjustment to the new rules, thus enabling the businesses to have enough time to meet the required standards.
The bill introduces significant increases in fines for AML violations, with penalties now reaching up to 5 million euros, a substantial increase from the previous maximum of 40,000 euros. This increase in potential penalties underscores the Estonian government’s determination to enforce compliance and deter malpractices within the cryptocurrency sector.
Adhering to European Union Regulations
“Estonia tailors the bill to align cryptocurrency market regulation with the European Union’s Markets in Crypto-Assets (MiCA) rules.” Estonia hopes to provide a consistent approach to cryptocurrency regulation among EU member states by taking these measures.
In addition, the bill modifies the securities prospectus requirement by raising the threshold for companies seeking to raise funds through shares or bonds. The purpose of this change is to facilitate the situation for businesses, making it more convenient and cheaper to obtain funds, as well as fostering the growth of the capital market of Estonia.
Estonia’s Crypto Regulation
Estonia has pioneered cryptocurrency integration, creating a crypto-friendly ecosystem since 2017 by designing friendly laws for crypto companies and simplifying registration procedures.
On the other hand, the country has also shown its desire for top-notch oversight, as proved by revoking many crypto company licenses in 2020 for not adhering to operational requirements. The new bill aligns Estonia’s approach to innovation in the cryptocurrency industry with a focus on adequate regulation and surveillance.
As a result, Estonia is on track to create a cryptocurrency market that is safer, more reliable, and transparent by transferring supervisory duties to the Financial Supervision Authority and adhering to EU-wide regulations.
