Estonia to Tighten Regulations Toward Cryptocurrency
Estonia is currently setting plans in place to regulate the country’s cryptocurrency industry. Reports emanating from the European country claim that it may tighten the regulation of its token and digital currency market as there are concerns that the industry is being used for money-laundering and terrorism financing.
Estonia’s Financial Supervision Authority (FSA) is taking a closer look at firms providing cryptocurrency-related services.
According to Aripaev, a local financial news outlet, if a regulatory tighten-up were to take place now, cryptocurrency exchanges would likely feel the brunt of it.
To watchers of the crypto industry, this news from Estonia is not surprising in the least. It has become the norm by most countries to demand that exchange platforms perform Know Your Customer (KYC) due diligence in addition to complying with anti-money laundering (AML) laws.
The FSA in Estonia, just like other regulators, is chiefly concerned with “the moment digital currency is bought or sold for fiat currency.” No country or region has been able to directly regulate or stop a blockchain, however.
In recent times, Estonia has made a name for itself as one of the highly sought-after markets for initial coin offerings (ICOs) and token sales. A major reason for this is the ease of registering a company in the country. Little wonder why it has become the preferred destination for most business startups. When cryptocurrency was booming, the country was listed by Ernst & Young among the “top 15 countries for raising funds through an ICO.”
In spite of these enticing advantages, the country has “never been a free-for-all country when it comes to token crowd sales.” The FSA has also buttressed this fact by stating that all token sales will be thoroughly scrutinized on a case-by-case basis. This stance suggests that some virtual assets may be classified as securities, despite the technology used, thus putting them under the country’s security regulations.
In addition, this new development signals that the country may have jettisoned its idea of a national digital currency called the Estcoin. Currently, Estonia has only nine functioning nodes dedicated to Bitcoin, a pointer that shows the commitment of the local cryptocurrency community.
Rumors of the cryptocurrency industry being used for money-laundering schemes and terrorism financing has prompted the government of Estonia to take a definite step towards regulating its local cryptocurrency sector. The financial authority has made plans to closely examine companies offering cryptocurrency-related services.
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