Estonia won’t ban cryptocurrencies, says Financial Ministry

The Estonian Finance Ministry has said investors should not be afraid of the country’s tougher rules on cryptocurrency.

The Baltic nation has been considering new rules that would enforce due diligence, audits and higher levels of capital for the crypto industry ahead of a review of its money laundering policies this quarter.

However, the newly-proposed bill would still need to be approved by Riigikogu – the Estonian parliament – where it needs to undergo three readings to become law.

The ministry confirmed the Estonian government recently approved draft legislation to more effectively regulate virtual asset service providers (VASPs) to mitigate the risk of financial crime.

“However, Estonia has no plans to make owning cryptocurrencies illegal, as some misconceptions on social media claim,” it added.

The new regulation is not applied to customers, but to VASPs which conduct activities for or on behalf of investors.

One of the most significant amendments affecting smaller VASPs are capital requirements, which will be raised, to ensure that licensed VASPs are active companies.

VASPs will be required to have a minimum of €125,000 or €350,000 of share capital, increased from the current floor of €12,000.

The average annual turnover of VASPs licensed by Estonia is currently €80m.

Estonia was among the first countries that had legally approved cryptocurrency licenses in 2017.

Since then, it has revoked around 2,000 of these, while approximately 400 licensed companies remain.