Estonian Government Approves Bill for Crypto Regulation

Highlights

Estonia shifts crypto oversight to FSA for tighter EU-aligned regulation.
Fines for AML violations in Estonia leap to €5M, enforcing strict compliance.
Estonian crypto entities must transition to FSA licenses by 2025 for EU harmony.

The Estonian government has approved a bill aimed at overseeing cryptocurrency service providers. This legislation aligns with the nation’s financial oversight with the European Union’s Markets in Crypto-Assets (MiCA) regulations. The bill, however, awaits a parliamentary vote to become law.

New Supervisory Framework

The proposed bill will put in place a strong regulatory framework transferring the oversight of cryptocurrency service providers from the Financial Intelligence Unit (FIU) to the Financial Supervision Authority (FSA). In the past, FIU used to register cryptocurrency service providers, which was mainly focused on compliance with Anti-Money Laundering (AML) measures.

Accordingly, the shift to FSA supervision implies a change to the more comprehensive regulation of the crypto industry. As of 2025, the FSA will commence the issuance of licenses to cryptocurrency service providers. This alteration highlights the determination of the Estonian government to strengthen supervision and verify that service providers comply with tough regulatory requirements.

In addition, in the new regulatory system, entities that currently have an FIU license will need to get an FSA license by the end of 2025. The interim stage facilitates a gentle adjustment to the new rules, thus enabling the businesses to have enough time to meet the required standards.

The bill brings a major hike in the fines for AML violations, with penalties going up to 5 million euros from the last ceiling of 40,000 euros. This increase in potential penalties underscores the Estonian government’s determination to enforce compliance and deter malpractices within the cryptocurrency sector.

Aligning with European Union Regulations

The bill is tailored to harmonize the regulation of the cryptocurrency market in Estonia with the Markets in Crypto-Assets (MiCA) rules of the European Union. By taking these measures, Estonia hopes to provide a consistent approach to cryptocurrency regulation among EU member states.

Furthermore, the bill changes the securities prospectus obligation by increasing the threshold for companies that want to raise funding by shares or bonds. The purpose of this change is to facilitate the situation for businesses, making it more convenient and cheaper to obtain funds, as well as fostering the growth of the capital market of Estonia.

Estonia’s Crypto Regulation

Estonia has been a pioneer in integrating cryptocurrencies, creating a crypto-friendly ecosystem starting from 2017 by designing friendly laws for crypto companies and simplifying registration procedures.

On the other hand, the country has also shown its desire for top-notch oversight, as proved by revoking many crypto company licenses in 2020 for not adhering to operational requirements. The new bill is part of Estonia’s policy of harmonizing innovation in the cryptocurrency industry with the provisions of sufficient regulation and surveillance.

Consequently, by transitioning the supervisory responsibilities to the Financial Supervision Authority and aligning with EU-wide regulations, Estonia is poised to establish a safer, more reliable, and transparent cryptocurrency market.

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Kelvin Munene Murithi

Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.

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