Regulation of Cryptocurrencies in Estonia
Small but technologically advanced Estonia was one of the leading European centers for cryptocurrency companies.
Many blockchain startups are registered in Estonia. However, the loyalty of the government, the minimum requirements imposed by the regulator for working with digital assets have led to the emergence of a large number of fraudulent projects and various abuses by crypto startups. This forced the country's authorities to reconsider their attitude to digital assets.
Estonia is tightening the regulation of digital assets and has introduced new rules, which, according to some experts, may hinder the prosperity of startups in the country.
The new rules followed after Europe tightened crypto regulation and the attitude of regulators became more cautious about cryptocurrencies after the collapse of the TerraUSD stable coin and its Luna token.
The new rules of the Estonian regulator were important for the development of the entire cryptocurrency industry.
Despite the fact that only 1.3 million people live in the country, last year more than half of all virtual asset service providers (VASPs) created in the world were registered in Estonia.
The new rules, which came into force on June 15, 2022, stated that Estonian crypto companies will have to comply with the new transparency requirements; they can no longer have anonymous accounts and must have a capital of at least 250,000 euros.
The government of the country is interested in creating and developing high-quality companies that actually offer something new and promising, not their number.
Quality means, first of all, those companies that really want to innovate and want to conduct legitimate business.
The new rules tightened the licensing process, which was too simple. In 2017, Estonia became the first country to issue crypto licenses.
This has made it very easy for hundreds of companies to obtain an Estonian license and operate anywhere in the world. In the beginning, the regulation was so easy that everyone who applied actually received a license. It was very cheap and simple.
As a result, Estonia has issued about 4,000 such licenses over the years. But serious problems have arisen.
Some companies have started doing business selling shell companies with licenses, taking advantage of the government's e-residency program that allows businesses around the world to register in the country remotely.
This, combined with the 2018 money laundering scandal involving Danske Bank and allegations of suspicious flows worth up to $200 billion (187 billion euros), forced the government to change its attitude to the regulation of digital assets.
Despite the tightening of legislation, more and more citizens of the country are actively using cryptocurrencies and the adoption of digital assets continues to grow. Residents of Estonia are increasingly using digital assets, and thanks to OWNR Wallet, you can now buy cryptocurrency with your credit/debit card.