Estonia has been known as a hub for cryptocurrency and blockchain startups, with its e-residency program attracting entrepreneurs from all over the world. However, a new law passed by the Estonian government has forced around 400 crypto firms to leave the country.
The law, which came into effect on March 10, 2020, requires all crypto companies operating in Estonia to obtain a license from the Financial Intelligence Unit (FIU). The license is only granted to companies that have a physical presence in Estonia and meet strict anti-money laundering (AML) and counter-terrorism financing (CTF) requirements.
The new law was introduced in response to concerns about money laundering and terrorist financing in the crypto industry. Estonia has been hit by several high-profile money laundering scandals in recent years, including the Danske Bank scandal, which saw billions of dollars laundered through the bank’s Estonian branch.
While the new law is aimed at improving the reputation of Estonia’s crypto industry and preventing money laundering, it has had unintended consequences. Many small crypto startups that cannot afford to set up a physical presence in Estonia or meet the strict AML and CTF requirements have been forced to shut down or move to other countries.
The Estonian government has defended the law, saying that it is necessary to protect the country’s reputation and prevent money laundering. However, critics argue that it is too restrictive and will stifle innovation in the crypto industry.
The new law has also raised questions about the future of Estonia’s e-residency program, which allows entrepreneurs from all over the world to establish and run businesses in Estonia remotely. The program has been a major draw for crypto startups, but the new law may make it more difficult for them to operate in Estonia.
Despite the challenges posed by the new law, some crypto firms have managed to obtain licenses and continue operating in Estonia. These firms are likely to benefit from increased trust and credibility in the eyes of investors and customers.
Overall, the new law has had a significant impact on Estonia’s crypto industry, forcing many firms to leave the country and raising questions about the future of the e-residency program. While the law is aimed at improving the reputation of Estonia’s crypto industry and preventing money laundering, it remains to be seen whether it will achieve these goals or simply stifle innovation in the industry.
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