By 2021, there will be an increase in both absolute and implicit limits on cryptocurrencies. Furthermore, the year saw an increase in the number of countries imposing bans on crypto-related activities and services within their borders.
Following previous speculations of a crypto prohibition in Estonia, the country’s Finance Minister has cleared the air. On Sunday, the Minister announced that the new legislative draught for Virtual Asset Service Providers would not include a crypto ban (VASPs).
This means that clients will be able to possess and trade cryptocurrencies without restriction. However, the suggested formality may include large capital requirements for VASPs, which may deprive decentralized wallet creators.
Prior to Sunday’s announcement, it was revealed that Estonia’s draught bill would outlaw DeFi and non-custodial wallets. A non-custodial wallet often gives users complete control over their digital assets and private keys.
However, the tweet referred to the new restrictions as outlined in a draught bill approved by the Estonian Parliament on December 23, 2021. The Minister of Finance, Keit Pentus-Rosimannus, noted in his statement that the bill was created to improve the criteria for anti-money laundering (AML) for VASPs.
The bill’s specific purpose is to reduce the number of anonymous accounts created. VASPs in Estonia are expected to provide their clients’ identification once they have received approval to provide wallets and account services.
The minister stated that no provision in the bill prohibits clients from trading or possessing cryptocurrency. He also stated that users are not required to give or expose the private keys to their wallets.
Following that, an informational page issued by the government on Monday addressed several frequently asked issues about the law. Furthermore, the minister indicated that the proposed bill comprises the country’s response to the Financial Action Task Force (FATF) recommendations on regulation VASPs.
Furthermore, the report cited the Estonian Financial Intelligence Unit’s (FIU) laxity with its preliminary requirements for licensing crypto service providers. The FIU began licensing crypto providers in 2017, however it revoked its license from over 1,000 crypto enterprises in 2020 owing to weak links to Estonia.
However, the new rule requires any VASP that obtains an Estonia license to have a verifiable relationship to or business in the country.
On December 31, 2021, Mikko Ohtamaa tweeted that Estonia’s prohibition included DeFi and Bitcoin. As a result, clients should not download or keep BTC in their wallets while in the country.
In addition, the bill specifies various capital requirements that VASPs must meet dependent on their services. The minimum share capital for VASPs is €125,000, or $141,000 in US dollars. The current value of the minimum share capital is €12,000, which is equivalent to $13,500.