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Post: Regulating Cryptocurrency Service Providers in Estonia: Transition to FSA Oversight and Higher AML Fines

Regulating Cryptocurrency Service Providers in Estonia: Transition to FSA Oversight and Higher AML Fines

Key Points:

  • A new bill in Estonia aims to regulate cryptocurrency service providers and bring the country in line with the Markets in Crypto-Assets (MiCA) regulation.
  • If approved, cryptocurrency service providers would be supervised by the Financial Supervision Authority (FSA) instead of the current oversight by the Financial Intelligence Unit (FIU).
  • The bill proposes higher fines for Anti-Money Laundering (AML) violations, increasing the maximum penalty from 40,000 euros to 5 million euros.

Regulating Cryptocurrency Service Providers in Estonia:

A new bill in Estonia is set to bring stricter regulation to cryptocurrency service providers by placing them under the supervision of the Financial Supervision Authority (FSA). This action aims to align Estonia with the Markets in Crypto-Assets (MiCA) regulation, a step towards ensuring compliance with international standards.

Supervision Transition and Fines Increase:

If the bill passes, the transition of supervision from the Financial Intelligence Unit (FIU) to the FSA will occur, with licensing under the new regime starting in 2025. Additionally, the proposed law suggests significantly higher fines for AML violations, escalating the maximum penalty to 5 million euros, a substantial increase from the current limit of 40,000 euros.

Impact on Compliance and Enforcement:

This regulatory shift would likely enhance compliance measures for cryptocurrency service providers in Estonia and strengthen enforcement mechanisms to deter AML violations. The higher fines signal a more robust regulatory environment, indicating Estonia’s commitment to combatting financial crimes in the cryptocurrency sector.

Hot Take

The move to enhance regulation and supervision of cryptocurrency service providers in Estonia demonstrates a proactive approach by the government to align with international standards. The proposed increase in fines reflects a growing recognition of the need for stringent AML measures in the evolving landscape of digital assets.

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