Updated: Jul 15
Recently, new and stricter crypto rules came into place in Estonia, and many companies might lose their licenses if they don't comply with them on time. The legislative landscape might seem puzzling and has certainly raised some questions.
That is why Complok teamed up with Silva Hunt and created a webinar to get all the questions answered. Silva Hunt's marketer and sales person Dagne interviewed Mari-Liis Kurg, an AML and KYC compliance expert and founder of Complok, on how e-Resident's crypto companies can comply with new regulations and why it still makes sense to get a crypto license in Estonia. Hereby, we are bringing out some of the key changes in the regulatory requirements.
What's new from the regulatory side?
As one of the first EU countries to offer cryptocurrency licenses Estonia is leading in EU licence holders. Money Laundering and Terrorist Financing Prevention Act (ALM Act) law was amended on the 15 March 2022 and new requirements for existing and future virtual asset service providers (VASPs) were introduced. definition of virtual asset service provider (VASP) services has now been expanded to include four service options:
virtual currency wallet service
virtual currency exchange service
virtual currency transfer service
the issue and trading of virtual currency service
The crypto industry is, by definition, an environment where potential AML/ KYC issues are raising questions among regulators. However, if you are familiar with the risky aspects, you are able to assess and mitigate these risks.
Share capital requirements of a VASP was subject to change and at least EUR 100,000 for a company providing virtual currency wallet is needed, virtual currency exchange and issue services and at least EUR 250,000. State fee for submission increased from 3300 to EUR 10,000 , there is a requirement to present a Two-year business plan together with requirement for Internal AML business processes and IT systems and auditor. Entire list of new enhanced due diligence requirements concerning virtual currencies transactions, counterparts identification and transactions related to data collection and storage were introduced.
What the future will hold?
The EU has reached a provisional agreement on the markets in crypto-assets (MiCA) proposal, which covers issuers of unbacked crypto-assets and so-called "stablecoins", as well as the trading venues and the wallets where crypto-assets are held. MiCA aims to bring more clarity to the European Union, as some member states like Estonia already have national legislation for crypto-assets. Still, so far, there has been no specific regulatory framework at the EU level.
What regulatory changes we are expecting after MiCA is launched in 2024?
Yes, MiCA is planned to be launched in 2024, and after that, the differences between countries' regulations related to VASPs will diminish.
Among many other requirements, the regulations require crypto asset service providers and stablecoin issuers to obtain operational licenses and implement stricter anti-money laundering and customer identification measures.
With the new rules, crypto-asset service providers have strong requirements to protect consumers' wallets and become liable if they lose investors' crypto-assets. In addition, MiCA covers market abuse related to any type of transaction or service, notably for market manipulation and insider dealing.
Actors in the crypto-assets market will be required to declare information on their environmental and climate footprint.
Crypto-asset service providers (CASPs) will need authorisation to operate within the EU.
How do regulators view NFT businesses and NFTs in general?
Non-fungible tokens (NFTs), i. e. digital assets representing real objects like art, music, and videos, will be excluded from the scope except if they fall under existing crypto-asset categories.
For more information on how to be compliant with the regulations and fight financial crime, contact us for training possibilities or follow us on social media to get the latest news in this field!