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Estonia Approves Bill to Regulate Crypto Service Providers

The Estonian government recently approved legislation transferring crypto oversight responsibilities to the Financial Supervision Authority (FSA) by 2026. This move is aimed at regulating local crypto service providers and bringing oversight to the emerging market.

According to reports from local media on Thursday, the proposed law intends to enforce stricter operational and reporting standards. However, it still awaits parliamentary approval to become official legislation.

This shift under the FSA’s jurisdiction is expected to enable Estonia to combat financial crimes such as crypto-related bankruptcies and cyber thefts more effectively.

Matis Mäeker, the head of the Financial Intelligence Unit (RAB), highlighted that this change means crypto businesses will now fall under “genuine financial supervision.”

Previously, the Estonian regulator focused solely on anti-money laundering (AML) requirements, neglecting other significant financial risks.

“They handle client assets – essentially functioning like banks by accepting deposits and managing those funds,” Mäeker elaborated. “They must safeguard those funds and establish systems to ensure they can return the money when clients request it.”

Furthermore, Minister of Finance Mart Võrklaev emphasized that crypto companies must obtain licenses from the FSA by 2026. “Starting in 2025, licenses will be issued by the Financial Supervisory Authority,” he stated. Additionally, businesses already licensed by the Financial Intelligence Unit must obtain a new license from the FSA.

Moreover, the current fine for violating AML regulations under financial law stands at 40,000 euros ($43,450). However, the new law could increase fines to up to 5 million euros ($5.2 million), according to the report.

Estonia’s Position in the Global Crypto Arena

Estonia stands out as one of the pioneering countries to legalize cryptocurrency activity and maintains a supportive stance toward it.

If approved, the bill would align Estonia with the European Union’s Markets in Crypto-Assets (MiCA) regulations. The MiCA framework, signed into law last year, is set to come into effect this year.

Thanks to its progressive legislation, favorable tax structure, efficient licensing procedures, and dynamic fintech ecosystem, Estonia has emerged as a preferred destination for crypto-related businesses looking for a competitive advantage.

However, there’s a downside. The Baltic nation has fallen prey to “massive-scale” crypto-related fraud and scams, according to an investigation report. The report highlights that international crypto criminals have laundered or defrauded victims of over €1 billion (1.05 billion).

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I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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