The number of registered crypto firms in Estonia has experienced an approximate 80% decrease due to enforcing the 2022 crypto law. This legislation requires companies to maintain significant capital reserves and establish genuine connections to Estonia. Data released by the country’s money-laundering regulator, the Financial Intelligence Unit (FIU), revealed that around 200 licenses were voluntarily withdrawn by firms, while the authority denied a similar number.
Matis Mäeker, the director of the FIU, stated that the renewal of authorizations uncovered unexpected situations that raised concerns among supervisors. Some applications hinted at possible links to illegal activities, with individuals being appointed to management boards without their knowledge or using falsified credentials. Moreover, many applications contained identical documentation because several companies had relied on the same cluster of legal and professional service firms for their paperwork.
Transitioning to on-site supervision
Mäeker emphasized that the FIU will soon shift from paper-based assessments to regular on-site supervision, allowing for more effective monitoring of crypto firms. Estonia, known for hosting digital giants like Wise, Bolt, and Skype, is striving to rebuild its reputation after the Danske Bank money laundering scandal involving Russian funds passing through the bank’s Tallinn branch.
As a member of the European Union, Estonia is also required to implement the bloc’s Markets in Crypto Assets regulation. This mandate stipulates that wallet providers and exchanges must obtain a license to operate within the jurisdiction. The nation’s efforts to strengthen its anti-money laundering framework have recently been evaluated by international standard-setters Moneyval.
Mäeker expressed hope that this evaluation would end Estonia’s banking sector scandals during a conference on March 29. By enforcing stricter regulations and enhancing supervision, Estonia aims to foster a more transparent and secure environment for the growth and development of its crypto industry.
