- The Finance Ministry of Estonia has clarified that cryptocurrencies will not be banned with the new anti-money laundering guidelines.
- However, crypto service providers (VASPs) will have new obligations including performing audits and acquiring licensure.
Estonia has made clear it will not ban cryptocurrencies in the country even as it seeks tighter money laundering rules.
Presently, the nation is pursuing anti-money laundering policies that affect crypto service providers. The draft legislation proposes laws that will require crypto firms to raise their due diligence standards, perform audits, and hold higher levels of capital. With the draft, came rumors of the government’s crackdown on decentralized finance (DeFi) and non-custodial wallets.
Even more, the nation’s Prime Minister, Kaja Kallas, has been skeptical about welcoming Bitcoin and other cryptocurrencies into the country. She has held her ground despite crypto lobbying by big industry players such as Coinbase.
Estonia and crypto assets
“I know one of my predecessors was a big proponent of crypto but I am very cautious,” Kallas said in a previous interview.
She also insinuated that there are no possibilities of Estonia legalizing Bitcoin as legal tender like El Salvador.
We are sensitive to these issues, and the cryptocurrency, how it is used, it’s a big problem, because you see the cyberattacks and how easily companies are paying out [ransom]money.
However, The Finance Ministry of Estonia has provided a clarifying statement, saying the new rules are exclusively applicable to Virtual Asset Service Providers (VASPs). These kinds of players handle crypto assets on behalf of their clients. Estonia citizens can, therefore, continue to freely trade or purchase digital assets.
“The legislation does not contain any measures to ban customers from owning and trading virtual assets and does not in any way require customers to share their private keys to wallets,” the statement read, adding, “The regulation does not affect individuals who own virtual currency through a private wallet not provided by a VASP.”
New requirements for crypto service providers
The proposed guideline limits VASPs from opening and owning anonymous crypto wallets, increasing the government’s oversight of their money flow. Per the government’s official website, the new bill comes after the Financial Action Task Force (FATF) urged regulation of cryptocurrencies and VASPs.
In 2017, Estonia allowed the issuance of operating licenses to VASPs, making it one of the first nations in the world to do so. Over time, however, concerns rose of the country becoming a hotbed for money laundering. For this reason, 2000 of the VASP licenses have been revoked, leaving only 400 firms with licenses. Additionally, the new guidelines state that new licenses will only be issued to firms based in Estonia which are subject to regulatory scrutiny.