Estonia’s government has approved a bill aimed at imposing stringent legal requirements on digital asset service providers, as reported by local media on March 21. The legislation, passed on March 20, is part of Estonia’s strategy to regulate the cryptocurrency industry and bolster its trustworthiness.
Anticipated Regulatory Oversight
Estonia has historically been a significant hub for cryptocurrency service providers, with 2021 estimates suggesting that nearly half of the world’s crypto service companies were registered in the country. However, regulatory efforts have since reduced this number to around 50 by the Financial Intelligence Unit (Rahapesu Andmebüroo/RAB) as of 2024.
Matis Mäeker, the head of RAB, highlighted forthcoming changes, revealing that the new regulation will subject crypto service providers to financial supervision for the first time. He stressed the importance of these companies implementing secure asset management systems, likening their responsibilities to those of banks.
Under the new regime, crypto service providers will be supervised by Estonia’s Financial Supervision Authority (FSA) or the Finantsinspektsioon beginning in 2026.
Stringent Requirements
The legislation introduces stricter operational and reporting standards for crypto businesses, with fines potentially up to €5 million—a significant increase from the previous €40,000 limit under the Anti-Money Laundering Act.
Moreover, crypto service providers will be required to obtain regulatory licences, which the FSA will start issuing in 2025. Existing entities holding FIU licences must apply for the new licences by 2026.
This legislative move follows several notable incidents of cyber thefts and business failures within Estonia’s crypto sector, resulting in substantial losses for investors. By subjecting companies to FSA oversight, the government aims to mitigate these risks and provide greater security for digital asset holders.
The new regulatory framework underscores Estonia’s ongoing commitment to striking a balance between encouraging financial innovation and ensuring market stability and investor safeguarding.
