Estonia Government to Implement Major Changes to Cryptocurrency Laws, May Close Most Exchanges
Most countries have been fairly clear about their stance on cryptocurrency – they either approve of it or they don’t. From that point, policies are developed, and regulations are outlined, ensuring that the public knows exactly what they are getting into.
However, while the launch of a government-backed cryptocurrency in Estonia suggested that the country was in support, recent regulatory decisions suggest that this is not true.
Reported by Reuters, the crypto hub will soon be implementing major security efforts to ensure that their work is not going to be used to benefit money laundering. The new protocols will require substantial cooperation from any businesses operating from Estonia, bringing up many other challenges along the way.
The deputy governor of the Bank of Estonia, Madis Muller, believes that the appeal of their country has been the opportunity for blockchain-related businesses. It has been clear that the country has hoped their participation would drive enough movement in the economy to bring in more businesses as a revival of sorts. However, with the great ease that comes with letting these businesses operate, the risk of money laundering has become even greater.
Lawmakers are presently in a debate over what to do to handle these circumstances, though it is clear that they plan to create a list of parameters that participants much follow. In a seemingly passive-aggressive decision, it looks like even passing the vetting process will be next to impossible, considering that having some sort of physical business presence in Estonia one of the necessary requirements.
Since the country has been a place that many operators do not need to reside in the past, the number of platforms that will even pass this requirement or minimal, at best. However, Muller seems unconcerned, saying that most of them:
“would not qualify to keep their license.”
Previously, the manager of the e-residency program, Kaspar Korjus, had brought up the idea to establish estcoin, which is the government-backed cryptocurrency suggested before. However, the plan has been thrown to the side, at least for now.
The e-residency program, before now, made it possible to bank in Estonia, but with exclusively electronic “citizenship” to non-citizens. However, it is this program that has led to the risks that Muller suggested. Speaking to Reuters, Muller commented,
“There is a money laundering risk with cryptocurrency operators. We have made it too easy for these crypto operators now. They get a reputational benefit from their link to Estonia. We get the reputational risk.”
In 2018, the Estonian branch of Danske was in the middle of a major money laundering scandal, with reports suggesting that up to $230 billion of their holdings were laundered. After bringing the Deutsche Bank into the problems that the Estonian bank is dealing with, the US Federal Reserve had to step in and investigate.
Madis Reimand, the head of Estonia’s Financial Intelligence Unit (FIU), has said that the risk introduced with e-residents is not very substantial. However, he supports the vetting process as a means to curb their potential for crime. Cryptocurrency is not the same story, as Reimand has said,
“We see really big threats from virtual currencies, especially threats of fraud and money laundering.”