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Estonia Clarifies Stance on Crypto Assets

  • Estonia’s Ministry of Finance has clarified that cryptocurrencies will not be banned with the new anti-money laundering guidelines.
  • However, Cryptographic Service Providers (VASPs) will have new obligations, including performing audits and obtaining a license.

Estonia has made it clear that it will not ban cryptocurrencies in the country, even as it seeks to tighten money laundering rules.

Currently, the country is pursuing anti-money laundering policies that affect crypto service providers. The bill proposes laws that will require crypto businesses to raise their due diligence standards, conduct audits, and hold higher levels of capital. Along with the project came rumors of a government crackdown on decentralized finance (DeFi) and non-custodial wallets.

Moreover, the country’s Prime Minister, Kaja Kallas, was skepticalIcallus on hosting Bitcoin and other cryptocurrencies in the country. It has held firm despite crypto lobbying from big industry players such as Coinbase.

Read more: Despite digital approach and Coinbase lobby, Estonian Prime Minister rejects Bitcoin

Estonia and Crypto Assets

“I know one of my predecessors was a huge crypto proponent, but I’m very cautious,” Kallas said in a previous interview.

Her too insinuated that there is no possibility for Estonia to legalize bitcoin as legal tender like El Salvador.

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We’re sensitive to those issues, and cryptocurrency, how it’s used, that’s a big deal, because you see cyberattacks and how easy it is for companies to pay [ransom]money.

However, Estonia’s Ministry of Finance has provided a clarifying statement, stating that the new rules apply exclusively to Virtual Asset Service Providers (VASPs). These types of players manage crypto assets on behalf of their clients. Estonian citizens can therefore continue to trade or buy digital assets freely.

“The legislation contains no measures to prohibit customers from owning and trading virtual assets and in no way requires customers to share their private keys to wallets,” the statement said, adding: “The regulation n does not affect individuals who own virtual currency through a private wallet not provided by a VASP.

New Requirements for Cryptographic Service Providers

The proposed directive prevents VASPs from opening and owning anonymous crypto wallets, increasing government oversight over their money flow. According to the official government website, the new bill comes after the Financial Action Task Force (FATF) called for the regulation of cryptocurrencies and VASPs.

In 2017, Estonia allowed VASPs to be issued operating licenses, making it one of the first nations in the world to do so. Over time, however, concerns have grown that the country is becoming a hotbed for money laundering. Because of this, 2,000 of the VASP licenses were revoked, leaving only 400 licensed companies. In addition, the new guidelines state that new licenses will only be issued to companies based in Estonia that are subject to regulatory control.

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