The Estonian government has passed a law introducing strict legal requirements for digital asset service providers and local media reported on March 21.
The legislation – approved on March 20 – is part of the country’s efforts to regulate the crypto industry and increase its reliability.
Regulatory oversight in sight
Estonia has been a key location for crypto service providers, with estimates in 2021 suggesting that almost half of the world’s crypto service companies were registered in the country.
As of 2024, the number of these companies has since been reduced to around 50 by the Financial Intelligence Unit (Rahapesu Andmebüroo/RAB) as part of regulatory efforts.
Matis Mäeker, the head of RAB, elaborated on the coming changes and indicated that the new regulations would subject crypto service providers to financial supervision for the first time. He emphasized the need for these companies to have systems in place to securely manage customer assets, drawing a parallel with the functions of banks.
Under the new regime, crypto service providers will fall under the supervisory authority of the Estonian Financial Supervisory Authority (FSA) or the Finantsinspektsioon from 2026.
Stricter rules
The new legislation imposes stricter operational and reporting requirements on crypto companies, with the possibility of fines of up to €5 million, a significant increase from the €40,000 limit under the previous Anti-Money Laundering Act.
Furthermore, the new rules will require crypto service providers to obtain regulatory licenses, which will be issued by the FSA from 2025. Meanwhile, entities that already have the current FIU authorization must apply for the new authorizations by 2026.
The legislation comes in response to several high-profile incidents of cyber thefts and business failures within Estonia’s crypto sector, which have resulted in significant losses for investors. By subjecting companies to FSA supervision, the government aims to limit these risks and ensure greater security for digital asset holders.
The new regulatory framework reflects Estonia’s continued commitment to maintain a balance between promoting financial innovation and ensuring market stability and investor protection.
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