The Road To Bitcoin Regulation In Estonia
Bitcoin regulation has been a sensitive subject across the world because it is difficult to regulate a decentralized cryptocurrency. Some countries have contemplated banning cryptocurrencies altogether because they saw them as a threat to financial order and an avenue of facilitating social evils such as money laundering.
Bitcoin regulation in Estonia has lately been a subject of debate and for good reasons. Estonia is one of the countries that have taken strict measures to overcome money laundering problems. However, the country also aims to maintain the right balance because it recognizes cryptocurrencies as the future of digital transactions and as an avenue for rapid growth. The country has taken a rather unusual approach to Bitcoin regulation, but we first need to understand Estonia's digital situation.
Not so long ago, Estonia was one of the impoverished countries in the European region. It sought to take advantage of growth through the digital space, and that is why it among the countries that have achieved a high level of digitization in the region. Consequently, it also has one of the fastest-growing economies in Europe. It also joins the list of countries that have identified the potential growth opportunities through digital currencies. That is why Estonia has worked towards being one of the most crypto-friendly countries in the world.
How Does Estonia Enforce Bitcoin Regulation?
Bitcoin is the most popularly traded digital currency in Estonia, which means that it has
received a lot of attention here. However, Bitcoin regulation is a bit of a stretch because the cryptocurrency is decentralized. However, there are other approaches through which countries can ensure regulation. Estonia’s approach involves providing licenses to cryptocurrency companies.
The licenses provide an avenue through which the government can enforce strict regulations that help protect people from fraudulent and scam crypto platforms. They also allow the government and the country to benefit through revenue collected as tax from crypto companies. The licenses are mainly issued to crypto exchanges and other types of companies that provide crypto services.
The regulation ensures that the companies professionally conduct themselves and put in place the right measures to ensure that users are protected. The country also provides Bitcoin regulation at the individual level, although with the help of crypto exchanges.
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Combating Money Laundering
Estonia's government realized in 2017 that despite the considerable advantage that cryptocurrencies have to offer, they also have significant downsides. Among them is the fact that cryptocurrencies can easily be used to launder money. The country then started considering crypto companies as risky because it would enable money laundering. This realization was the foundation on which the country developed its strict regulations to ensure that crypto companies also enforced the regulatory restrictions.
Bitcoin regulation in Estonia started with the creation of the Anti Money Laundering and Terrorism Finance Prevention Act (AML/CFT) in 2017. The AML act has been critical in streamlining the operations of crypto companies in the country, thus allowing for proper Bitcoin regulation without having to control the cryptocurrency. The law requires crypto companies to secure a Virtual Currency Wallet Service Licence and Virtual Currency Exchange Service Licence from the Financial Conduct Authority.
The crypto companies are required to put in place Know Your Customer guidelines and also to ensure that they maintain strict reporting. Failure to uphold these requirements will lead to the revocation of their licenses. Estonia has already licensed more than 1,400 companies in the crypto space in the last three years alone. It highlights the fact that there is a lot of interest from customers and companies looking for growth opportunities in a market that embraces digital currencies and digital technologies.
Obtaining A Cryptocurrency License In Estonia Is Not Easy
Estonia's government decided to pass a law that would enforce strict requirements for any company applying for a crypto license in the country. The recent law requires crypto companies applying for a license in the country to pay €3,300 ($3,715). They previously only had to pay€300 for the same license. The duration for waiting for a license approval also got extended from the previous one month to three months.
The latest tightening of Bitcoin regulations in Estonia does not spare individuals. Although there are still no taxes on profits from the crypto, anyone purchasing cryptocurrencies worth more than €1,000 is required to explain their purchase to the relevant authority. This move aims to make it more difficult for people to take advantage of the crypto space to launder money. If you plan to make a huge Bitcoin purchase in Estonia, ensure that you will not be going against the above Bitcoin regulations and cryptocurrency regulations in general.
The increased complexity in the registration and licensing of cryptocurrency companies might be aimed at streamlining the industry and preventing fraud. As a result, crypto companies have found it extra challenging to set up operations in the country. Fortunately, there is a viable solution for any company that is serious about launching crypto operations in the country. Consulting24 provides consultancy services that aim to help crypto businesses to set up shop in
Estonia.
Individuals can also benefit from Consulting24 if they want to invest in Bitcoin and other cryptocurrencies. The consultancy service has a new platform called BuyBitcoin24.com, which aims to guide anyone aspiring to profit off the crypto market by investing in digital currencies.
Key Takeaways From The Journey To Bitcoin Regulation In Estonia
Estonia has made it clear that it is on a digitization fast-track. It is why it has embraced the cryptocurrency market as one of the avenues through which it can become a leading country in terms of digitization. Consequently, it is an attractive urisdiction for crypto companies and individuals planning to conduct business legally in the crypto space.
However, due to the fraud concerns and also money laundering operations involving cryptocurrencies, Estonia has resolved to use strict guidelines and requirements for companies that want to safely and legitimately provide their crypto services in the country. The more stringent requirements are suitable for clients because they are designed to facilitate Bitcoinregulation, thus fostering safer investment opportunities in the cryptocurrency space.
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