According to recent data released by Estonia’s money-laundering regulator on Monday, the implementation of a controversial crypto law has led to an approximately 80% reduction in the number of registered firms in the country. The Financial Intelligence Unit (FIU) of Estonia, responsible for enforcing the 2022 law, revealed that around 200 licenses were voluntarily surrendered by the firms themselves, while a similar number of applications were rejected. The new law mandates that companies maintain substantial capital reserves and establish genuine connections to Estonia.
Matis Mäeker, the director of the Financial Intelligence Unit, expressed surprise at some of the situations encountered during the renewal of authorizations, stating that certain applications exhibited suspicious circumstances that hinted at possible links to illicit activities. Instances were discovered where individuals were appointed to management boards without their knowledge or through the use of falsified credentials. The FIU also noted that documentation submitted by different companies often displayed striking similarities, indicating that many of them had relied on the services of the same group of legal and professional firms.
Key takeaways
- Estonia's 2022 crypto law cut the number of registered firms by roughly 80%, according to the country's Financial Intelligence Unit.
- About 200 licences were voluntarily surrendered and a similar number of applications were rejected.
- The law requires companies to hold substantial capital reserves and demonstrate genuine ties to Estonia.
- FIU director Matis Mäeker described finding people appointed to management boards without their knowledge, and applications using falsified credentials.
- Documentation from different companies was often strikingly similar, indicating many had used the same small group of legal and professional service firms.
Mäeker emphasized that with the progress made in terms of supervision, the focus would soon shift from paper assessments to daily on-site supervision. He had previously remarked to CoinDesk that the crypto law aimed to professionalize what he referred to as “hippie-like” crypto projects.
In addition to grappling with the challenges posed by the crypto sector, Estonia has been working to restore its reputation following a scandal involving the laundering of Russian funds through the Tallinn branch of Danske Bank. As a member of the European Union, the country is also obligated to implement the bloc’s Markets in Crypto Assets regulation, which necessitates that wallet providers and exchanges obtain a license.
During a conference on March 29, Matis Mäeker referred to a recent evaluation of Estonia’s anti-money laundering efforts conducted by international standard-setters Moneyval, describing it as an important achievement for both the country and the FIU. He expressed his hope that the evaluation would bring closure to the banking sector scandals and restore trust.
Frequently asked questions
Why did Estonia tighten the rules?
The country had been rebuilding its reputation after the laundering of Russian funds through Danske Bank's Tallinn branch. Mäeker separately described the law's purpose as professionalising what he called 'hippie-like' crypto projects.
What changes next for supervision?
Mäeker said the focus would move from assessing paperwork to daily on-site supervision, now that the licensing round has filtered out most of the register.
How does EU regulation factor in?
As an EU member, Estonia must also implement the Markets in Crypto Assets regulation, which requires wallet providers and exchanges to hold a licence — so national tightening runs alongside a bloc-wide framework.
