Estonia is cracking down on the cryptocurrency market after having enjoyed the initial wave of the digital-currency revolution half a decade ago.
The government of Estonia is considering tightening its policies after becoming a popular European center for digital currency. along
Director of Estonia’s Financial Intelligence Unit (FIU) Matis Maeker said,” “We will toughen our supervision, we will toughen our approach which concerns the market entry,” “We were the first country to regulate them, this was a gateway for them to have a license because no one licensed them.”
The FIU is an independent body in affiliation with the Finance Ministry and has the powers to grant as well as revoke cryptocurrency licenses as part of its main remit fighting money laundering.
For the NATO member of 1.3 million, the matter is of grave concern. The baltic nation is making efforts to move beyond a huge money-laundering scandal in 2018 that comprised of Danske Bank’s Estonian unit handle 200 billion euros ($232 billion) of suspicious transactions.
As a result, authorities have revoked around 2,000 licenses for crypto exchanges and wallets. The Estonian government is now considering new legislation to tighten oversight across the board. The new legislation would comprise requirements for audited annual reports, higher capital levels, along with due diligence thresholds on transaction volumes.
All across the world, governments are trying to design mechanisms to regulate digital assets. China has imposed a ban on crypto transactions altogether. On the other hand, El Salvador has designated bitcoins as legal tender.
In Estonia, things got even worse after the country’s security services in April, investigated a company called Shitcoins.club. The firm’s ATMs converted clients’ physical banknotes into anonymous digital coins. It was designated a security risk and its license was revoked by the FIU.
The crypto companies could be registered in Estonia, but have an international client base. As per FIU, the top customers are in the U.S., Venezuela, Russia, Vietnam, Indonesia, Brazil, and India.
In a study conducted in 2020, only 10% of crypto-service providers licensed in Estonia had accounts with local banks. Around 40% used Lithuanian institutions as lenders and 20% banked with U.K. institutions.
As per FIU chief Maeker, if Estonian officials had been able to foresee the risks associated with crypto companies in 2017, they wouldn’t have allowed such explosive growth.
Maeker said , “Definitely the decision would have been different. We are learning, but I also want to make the remark, the entire world is learning.”