Estonia is cracking down on crypto: Here's why
6/8/2022, 05:27 PM
Estonia, a small but tech-mighty nation, was one of Europe’s leading destinations for cryptocurrency companies. However, the Baltic nation is now getting tough on how it regulates its digital assets and will bring in new rules this month, which some say could deter Estonia’s thriving start-up scene.
The country’s new rules come into force as Europe cranks up crypto regulation and as policymakers become warier of cryptos in the wake of the collapse of the stablecoin TerraUSD and its sister token Luna.
“Cryptocurrency currencies as an asset class is clearly a very, very volatile asset. So I think in the first place, people who invest in it need really to understand what kind of risks they are taking,” Andres Sutt, Estonia’s Minister of Entrepreneurship and Information Technology, said in an interview with Euronews Next. “And I'm afraid not everybody understands it”.
Estonia’s new regulations mark a sharp U-turn for a country that has a population of just 1.3 million yet last year was home to more than half the world’s registered virtual-asset service providers (VASPs) last year.
The new rules, which begin on June 15, mean Estonian crypto companies will need to meet new transparency requirements; they can no longer have anonymous accounts and they must have a capital of at least €250,000.
While some criticise the new regulations as too heavy-handed, Estonia’s government says they are necessary. “I don't think we have become too tough, but what we are focussing on is on the quality, not quantity [of crypto companies] and the quality means, first and foremost, those companies who actually want to innovate the field, or want to, to do a legitimate business,” said Sutt.
Estonia’s Ministry of Finance admits the new rules could reshape the country’s tech scene, but it is adamant it is being fair. “There are risks that some service providers should close their shops but on the other hand, I think we still in general, we are a very technology-friendly country,” Kristen Leppik, from Estonia’s financial services department, told Euronews Next.
“We don't want to shut down the crypto wallets or we do not want to ban and trading in bitcoin or any other cryptocurrency. This is not our objective and we don't want to regulate any DeFi or mint NFTs. This is not our purpose. Its main purpose is to just foresee some general or most common investor protection rules also in this field”.
The new rules essentially shore up a licensing process that many in Estonia’s crypto scene believe was too loose. The so-called licenses allow you to offer two types of crypto services: wallet or exchange.
The country’s new rules come into force as Europe cranks up crypto regulation and as policymakers become warier of cryptos in the wake of the collapse of the stablecoin TerraUSD and its sister token Luna.
“Cryptocurrency currencies as an asset class is clearly a very, very volatile asset. So I think in the first place, people who invest in it need really to understand what kind of risks they are taking,” Andres Sutt, Estonia’s Minister of Entrepreneurship and Information Technology, said in an interview with Euronews Next. “And I'm afraid not everybody understands it”.
Estonia’s new regulations mark a sharp U-turn for a country that has a population of just 1.3 million yet last year was home to more than half the world’s registered virtual-asset service providers (VASPs) last year.
The new rules, which begin on June 15, mean Estonian crypto companies will need to meet new transparency requirements; they can no longer have anonymous accounts and they must have a capital of at least €250,000.
While some criticise the new regulations as too heavy-handed, Estonia’s government says they are necessary. “I don't think we have become too tough, but what we are focussing on is on the quality, not quantity [of crypto companies] and the quality means, first and foremost, those companies who actually want to innovate the field, or want to, to do a legitimate business,” said Sutt.
Estonia’s Ministry of Finance admits the new rules could reshape the country’s tech scene, but it is adamant it is being fair. “There are risks that some service providers should close their shops but on the other hand, I think we still in general, we are a very technology-friendly country,” Kristen Leppik, from Estonia’s financial services department, told Euronews Next.
“We don't want to shut down the crypto wallets or we do not want to ban and trading in bitcoin or any other cryptocurrency. This is not our objective and we don't want to regulate any DeFi or mint NFTs. This is not our purpose. Its main purpose is to just foresee some general or most common investor protection rules also in this field”.
The new rules essentially shore up a licensing process that many in Estonia’s crypto scene believe was too loose. The so-called licenses allow you to offer two types of crypto services: wallet or exchange.