Head of Estonian regulator proposes revoking previously issued cryptocurrency licenses

The new head of the Estonian Financial Intelligence Unit (RAB), Matis Mäecker, proposed revoking all licenses previously issued for cryptocurrency trading. This was сообщили by local media.

Mäecker cited data from a survey among virtual-currency providers, which showed that the volumes of crypto business have grown manyfold in recent years.

“According to preliminary findings, they have almost 5 million clients, and the turnover accounts for 40% of the volume of international payments in the banking sector, i.e., more than 20 billion euros per year,” he said.

The head of RAB noted that the risks associated with cryptocurrency trading could have undesirable consequences for Estonia.

Mäecker proposed increasing the minimum required size of the share capital of firms engaged in cryptocurrency trading to 350 000 euros, with the clarification that the company must actually hold these funds in cash or in low-risk, highly liquid securities.

The RAB also proposed obliging such firms to strengthen the security of their IT systems, and for owners to actually invest client funds raised from customers, because there are frequent cases where such funds vanish.

Mäecker added that, despite the presence of diligent investors in the virtual currency sector, his department increasingly encounters companies with no ties to Estonia, not intending to serve Estonian clients or invest money in Estonia and jobs.

“Their sole aim is to obtain an Estonian license and use it to move very large sums, with Estonia getting nothing from this,” the official said.

Mäecker gave a critical assessment of the registry of beneficial owners created in Estonia several years ago, which was meant to increase transparency of company ownership structures, because, in his words, the data in the registry are not actually checked.

In December 2020, Estonian authorities revoked licenses from more than 1,000 cryptocurrency companies and warned of further tightening of regulation. At that time, nearly 400 organisations were still operating in the country.

In September 2021, Finance Minister Keit Pentus-Rosimannus confirmed plans to change the requirements for cryptocurrency service providers in response to rising risks of money laundering and terrorist financing.

She also proposed that the Estonian Financial Intelligence Unit consider temporarily suspending the issuing of new licenses о временной приостановке выдачи новых лицензий until the new regulation enters into force.

The bill tightening the requirements on crypto firms is now being coordinated between agencies.

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