The Estonian government is tightening the regulation of cryptocurrencies. It has adopted a corresponding bill, mainly to reduce the risk of financial crime. The revised bill is based on the general prohibition of opening anonymous virtual accounts. The Estonian government complied with this regulation in the summer of 2020. Before that, the favorable legal environment had caused a boom in license applications. With that, however, virtual assets were also in his sights. Estonian Financial Intelligence Unit (FIU) and other law enforcement agencies.
However, the regulation does not apply to customers of crypto exchanges. Ergo, the legislation does not contain any measure that prohibits the possession or trading of virtual assets. Estonian customers are not required to transfer their private keys for wallets. However, the law requires that Estonian Virtual asset service providers (VASP) open accounts cannot be anonymous.
Estonia bans reselling of cryptocurrency market licenses
Another important innovation is that only companies active in Estonia or affiliated with Estonia can apply for a license to operate as a VASP. Current regulations still allow a company to resell its license to a third party that has no connection to Estonia.
Another change concerns capital requirements. For admission to Estonia, exchanges must show at least 125,000 or 350,000 euros of share capital, depending on the type of service offered. This lower limit is currently only 12,000 euros. The license fee will also be increased from 3,300 euros to 10,000 euros. In addition, as of April 2022, a supervision fee of 1 percent of the share capital and 0.035 percent of all transactions for services for the transfer of virtual assets will be charged. The bill has now been submitted to the Riigikogu, the Estonian parliament, where it must go through three readings to be passed into law.