Estonia’s controversial crypto law has caused the number of registered firms to drop by around 80%, according to data released by the country’s money-laundering regulator on Monday.
The Financial Intelligence Unit, which is responsible for enforcing the 2022 law requiring companies to maintain substantial capital reserves and authentic links to Estonia, rejected around 200 license applications while firms withdrew the same number themselves, media reports said.
Matis Mäeker, the director of the Financial Intelligence Unit, said that the agency had uncovered “suspicious circumstances” in some of the applications, which suggested links to illegal activities.
Some applications showed individuals appointed to management boards without their knowledge or with falsified credentials, while documentation was often identical between different companies, indicating that many of them had used the same cluster of legal and professional service firms.
Mäeker also mentioned that the law had required “hippie-like” crypto projects to professionalize, but that the country could soon return to normality in terms of supervision. He added that the FIU would move largely from assessing applications on paper to daily on-site supervision.
Estonia, home to digital unicorns such as Wise, Bolt, and Skype, has been trying to restore its reputation following a scandal involving the laundering of Russian funds through the Tallinn branch of Danske Bank. As a member of the European Union, Estonia will also soon have to implement the bloc’s Markets in Crypto Assets regulation, which requires wallet providers and exchanges to obtain a license.
Mäeker spoke positively about the recent evaluation of Estonia’s anti-money laundering efforts by international standard-setters Moneyval, calling it “tremendous work for the entire country as well as the FIU.” He also expressed his hope that it would help close the book on Estonia’s banking sector scandals.
