The Estonian Ministry of Finance has denied the crypto/blockchain industry insiders concerns related to the new legislation draft – stating that regulations will not be applied to retail investors but to businesses, and that there will be no ban on people owning crypto.
In late December, Estonia’s government approved a draft legislative proposal that amends the country’s Money Laundering and Terrorist Financing Prevention Act, introducing new regulations to cover virtual asset service providers (VASPs).
Märt Belkin, Press Officer at the Estonian Ministry of Finance, told Cryptonews.com that the proposed legislation is specifically targeted to VASPs, and it “does not ban any individual from owning cryptocurrencies.”
“The legislative proposal was approved by the government on December 23. The bill will now pass to the parliament where it has to undergo three readings to become law. It is expected that the law will take full effect in the first half of 2022,” Belkin said.
Estonia’s coalition government, led by Prime Minister Kaja Kallas from the liberal Reform Party, benefits from a comfortable majority of 59 out of the 101 lawmakers who sit in the Riigikogu, the country’s unicameral parliament, which indicates that the legislation is likely to be passed.
While the draft legislation, which is to ensure Estonia complies with recommendations from the Financial Action Task Force (FATF), does not contain measures to ban customers from owning and trading digital assets such as crypto, its provisions are based on an assumption that “accounts opened with Estonian VASPs cannot be anonymous and Estonian VASPs cannot offer anonymous accounts or wallets,” according to a statement by the Finance Ministry.
“The new regulation also states that only companies who operate in Estonia or are connected to Estonia can apply for a license to operate as a VASP,” the statement said.
The ministry has released a frequently asked questions (FAQ) document in which it explains some of the new requirements that are to be introduced. To obtain a VASP license, a business will need to amass a share capital of at least EUR 125,000 (USD 141,000) to operate as a wallet service, exchange, launch initial coin offerings and operate “similar platforms”.
For companies that wish to offer “transfer services, the minimum is 350,000 euros. Previously, the floor was 12,000 euros. The license fee is increased to 10,000 euros, up from 3,300 euros. Additionally, a supervision fee will apply starting from April 2022 in the amount of 1% of share capital and 0.035% of all transactions for virtual asset transfer services,” the FAQ document says.
Meanwhile, the draft legislation triggered concern amid local industry observers, with some, like Estonian decentralized finance (DeFi) researcher programmer Mikko Ohtamaa, saying that Estonia’s authorities were effectively planning to ban DeFi this March.
User CZhead disagreed, tweeting that Estonia does not want to “ban DeFi, it will require a KYC [Know-Your-Customer] on any addresses financial institutions are interacting with,” they said, arguing that this may become a standard for many countries in the coming years.
“Basically, everything comes back to the fact that Estonia has been the loosest across the world regarding licences from 2018-2021, and now we have the most licenced crypto companies per capita in Estonia,” tweeted user Sander the Ape.
The growing number of crypto bans
Per the ‘Regulation of Cryptocurrency Around the World: November 2021 Update’, prepared by the staff of the Global Legal Research Directorate, The Law Library of the United States Congress,
“[T]he number of countries found to have issued cryptocurrency bans has increased significantly” since the 2018 report.
The 2018 report identified 8 jurisdictions with an absolute ban and 15 jurisdictions with an implicit ban,
while in November 2021 this went up to 9 and 42, respectively.
The application to crypto of tax laws and/or AML/Combating the Financing of Terrorism (CFT) laws has “increased exponentially”: in 2018, 33 jurisdictions were found to regulate cryptocurrencies in these areas, with 5 applying both tax and AML/CFT laws, while in late 2021 update, 103 jurisdictions (including the EU member states, except Bulgaria) are identified as applying these laws to crypto, with a majority applying both.
Source: Cryptonews
