400 Crypto Firms Shut Down in Estonia After New AML Laws
• Estonia has amended its Terrorist Financing Prevention and Anti-Money Laundering laws, resulting in nearly 400 virtual asset service providers (VASPs) either closing down or having their authorizations revoked.
• The Financial Intelligence Unit (FIU) of Estonia reported that the amendment to the AML laws has seen 200 domestic crypto service providers voluntarily shut down and 189 others had their authorizations revoked due to non-compliance with the requirements.
• As of May 1, there were 100 active crypto firms registered in Estonia.
New Laws Increase Regulation on Crypto Firms in Estonia
Estonia recently amended its Terrorist Financing Prevention and Anti-Money Laundering laws, resulting in nearly 400 virtual asset service providers (VASPs) either closing down or having their authorizations revoked. The Financial Intelligence Unit (FIU) of Estonia reported that the amendment to the AML laws has seen 200 domestic crypto service providers voluntarily shut down and 189 others had their authorizations revoked due to non-compliance with the requirements. As of May 1, there were 100 active crypto firms registered in Estonia.
Issues Identified by FIU
The FIU highlighted a number of issues it found within local crypto firms, such as dodgy execs and nonsensical business plans. These issues likely contributed to the large number of VASPs that chose to close or have their authorization revoked rather than comply with the enhanced regulations. Matis Mäeker, director of FIU noted that “In renewing authorisations, we saw situations that would surprise every supervisor” when discussing the new law changes.
Increased Requirements for Crypto Firms
The updated regulations expanded the defined scope of VASPS, requiring firms to have legitimate links to Estonia as well as increased licensing fees, capital and information reporting requirements, along with introducing the Financial Action Task Force Travel Rule. Compliance with these regulations is essential for any firm wishing to continue running in this space as failure can result in revoking authorization or even closure depending on severity.
Benefits for Consumers
These new regulations may seem burdensome for businesses but ultimately should be beneficial for consumers looking to use crypto services from a licensed VASP provider knowing they are compliant with local laws and regulatory standards when it comes to anti-money laundering prevention measures. This should provide greater levels of security when investing through a regulated platform and increases consumer trust in such platforms going forward into 2021 and beyond.
Conclusion
Due to recent law changes within Estonia related to money laundering prevention measures almost 400 virtual asset service providers (VASPS) have been removed from operation either voluntarily or because they could not meet compliance requirements set forth by authorities which resulted in revocation of authorization documents. The remaining 100 active companies must now comply with stricter standards set out by regulators if they wish remain operating within this space going forward into 2021 so consumers can enjoy greater levels confidence when investing through regulated platforms knowing they are compliant with anti-money laundering rules and regulations