While the Estonian public functionaries, responsible for supervising the state’s financial system, are working towards drafting comprehensive but strict crypto rules and regulations, yet the authorities have started considering whether to terminate the crypto licenses granted earlier to the crypto trading platforms or whether they should simply start from the scratch.
Estonia is by far the lowest populous state with only 1.3 million citizens in it and falls within the European region. But in contrast to their smallest population, the crypto interest there is humongous. This is because the state provided for a crypto-friendly business environment in the country. Resultantly, Estonia became a magnet for multiple crypto trading and investment platforms by obtaining operating licenses.
But like many parts of the world, the times are changing in Estonia as well with regard to crypto business and activities. At presently, the crypto exchanges in Estonia transact crypto funds amounting to 20 Billion Euros per annum. This makes up approximately 40% of the cross-border fiat transactions processed by local financial institutions. These facts were duly given by the man in charge of the Estonian regulator Financial Intelligence Unit’s (FIU’s) namely Matis Maeker. However, the majority of these crypto firms are apparently lacking bank accounts. Maeker explains that out of every 10 crypto investment and trading firms, only one holds a bank account.
Currently, the crypto exchanges operating in Estonia are fled with local and global customers. They are catering to approximately 5 million crypto investors throughout the world. However, there are also exchanges in the country which are not Estonian-based, yet they are operating from Estonia. In addition, most of these firms are not interested in strengthening Estonian economy. Maeker noticed that most of these firms are not providing job opportunities in the country. Even they are not investing any funds in any project which would benefit Estonia and the people living therein. Their only aim is to obtain operating licenses and then to transact huge sums of money.
He claimed that when the Government in 2017 decided to issue licenses to these companies, the officials failed to ascertain the risks. If they knew that crypto exchanges wouldn’t contribute in the country’s economy and financial system, then the growth could have been controlled. He said that now the Government has realized that it made a mistake and correction is required.
It was in 2019 when Estonian Government started to take initiative against crypto firms. Since then, more than two-thousand licenses have been terminated by the Government/FIU. Now there is a consensus amongst lawmakers and Government/FIU that they need more strict regulations for crypto activities. For this purpose, a law has been drafted by the country’s Finance Ministry which is strict in nature. It is expected that if passed, then the law would incorporate further requirements for obtaining a crypto license. For instance, increasing the capital and mandatory yearly audits of the firms have been considered to be introduced through the proposed law.
It has also been proposed in the law whether all the licenses should be revoked once and for all and issued afresh.