The Estonian government has given its approval to a bill aimed at regulating cryptocurrency service providers. However, the bill still needs to pass a parliamentary vote before becoming law. Under the proposed legislation, cryptocurrency service providers would fall under the supervision of the Financial Supervision Authority (FSA).
Currently, these providers are registered with the Financial Intelligence Unit (FIU) and must comply with Anti-Money Laundering (AML) regulations. If the bill is enacted, the FSA will start issuing licenses in 2025, and existing FIU license holders will be required to apply for FSA licensing by the end of that year. Estonian Finance Minister Mart Võrklaev expressed confidence in the licensing process, stating that those who are serious about providing services will be able to obtain the necessary licenses from the Financial Supervisory Authority.
Under the current national law, fines for AML violations can reach up to 40,000 euros ($43,450). However, if the new bill becomes law, fines of up to 5 million euros ($5.2 million) would be possible. Võrklaev announced that he submitted the bill to the government last week, and it now awaits approval from the government before being presented to the Riigikogu, the Estonian parliament, for a vote.
The bill aims to align Estonia with the European Union’s Markets in Crypto-Assets (MiCA) regulations and would also modify the securities prospectus requirement. Estonia established itself as a crypto-friendly jurisdiction in 2017 when it introduced favorable legislation for crypto companies and simplified registration processes, including e-residency. However, the country tightened regulations in 2020 following a non-crypto-related corruption scandal.