New requirements for Estonian Cryptocurrency Licenses in 2022

In this article we will discuss the new legislation and requirements for Estonian Cryptocurrency Licenses.

The Estonian Money Laundering and Terrorist Financing Prevention Act has received an amendment, which aims to tighten the regulation of virtual asset service providers (VASPs). The amendment has been in force since 15.03.2022. The existing providers of virtual currency services who have been granted an authorization under the Act are required to bring their operations and documents into compliance with the amendments by 15 June 2022.

The aim of this new legislation is to bring the regulation of VASPs more in line with e-money institutions and payment service providers, but it does not directly affect customers or individuals who use private wallets from owning crypto. As the Estonian VASPs are not allowed to provide anonymous services and are obliged to identify their clients, the new legislation further prohibits Estonian VASPs to open anonymous virtual accounts and wallets. The rules are not applied to customers, but to VASPs who conduct activities for or on behalf of a natural or legal person as a permanent business, as VASPs are obliged entities under the Anti-Money Laundering Act of Estonia.

The new amendments also require an Estonian-licensed VASP to either operate in Estonia or to have a demonstrable connection to Estonia. Under the new legislation, the resale of licenses is restricted and capital requirements for VASPs are increased in order to ensure that the licensed entities will be active and able to fulfill their obligations. This is aimed to reduce the economic appeal of keeping VASP licenses inactive for future use or re-sale purposes.

In the next part, we will discuss the new definitions of VASPs.

To find out more about requirements for crypto companies and cryptocurrency licenses in Estonia, please refer to our Baltic lawyers at info@gencs.eu