The Estonian government has approved a bill to regulate cryptocurrency service providers, pending a parliamentary vote. Under the proposed law, these providers would fall under the supervision of the Financial Supervision Authority (FSA), replacing the current oversight by the Financial Intelligence Unit (FIU) and necessitating compliance with Anti-Money Laundering (AML) rules.
Finance Minister Mart Võrklaev said that the FSA would begin issuing licenses in 2025, with existing FIU license holders required to apply for FSA licensing by the end of that year.
Notably, the bill introduces stricter penalties for AML violations, with fines potentially reaching up to 5 million euros (US$5.2 million), a significant increase from the previous maximum fine of 40,000 euros ($43,450).
The legislation aligns Estonia with the European Union's Markets in Crypto-Assets (MiCA) regulations and adjusts the securities prospectus requirement, raising the threshold for companies seeking to raise capital to 8 million euros ($86.9 million) from the previous 5 million euros.
Estonia's regulatory stance on cryptocurrency has shifted over time. Initially known for its crypto-friendly laws in 2017, the country tightened regulations in 2020 following a non-crypto-related corruption scandal. This led to the revocation of 500 FIU-issued crypto company licenses, with the number of licensed crypto firms dropping significantly.
Subsequent amendments to the law, including stricter AML requirements, resulted in the closure of nearly 400 virtual asset providers by 2023.