The law would mean such service providers coming under the supervision of the Financial Supervision Authority (Finantsinspektsioon).

Minister Võrklaev said via a press release: "With this legislation we would be establishing clear requirements for cryptocurrency service providers, to ensure fair competition and to help protect consumers and investors alike, as well as to combat fraudulent activity."

Despite being well over a decade old, the cryptocurrency market had not yet been uniformly regulated across the EU; save with regard to anti-money laundering regulations. Other than that, the situation and regulations differ from one member state to another.

This has fueled several large-scale scams, and has affected the credibility of the cryptocurrency market, it is argued. At the same time, cryptocurrency and associated new tech also contains additional opportunities for innovation in digital services, in alternative means of payment and in new sources of financing, the Ministry of Finance added in its press release.

In any case, last spring, Regulation (EU) 2023/1114 of 31 May 2023 on markets in Crypto-assets (the Markets in Crypto-assets Regulation (or MiCA, for short) was unveiled, and set up uniform rules for market participants across the EU.

MiCA introduces a dedicated and harmonized comprehensive framework for markets in cryptoassets, at EU level, in order to provide specific rules on the sector.

In the future, the financial inspectorate will supervise cryptocurrency service providers in Estonia; in other words the Võrklaev-sponsored bill is the domestic legislation which ensures MiCA is implemented in Estonia.

Currently, a cryptocurrency service is referred to as a virtual currency service, and would-be service providers must apply for an activity license must be applied for from the anti-money laundering bureau (known in Estonian as RAB).

Current service providers will be able to continue their activities on the RAB license basis through to January 1, 2026, after which a broader concept of cryptocurrency will apply.

To continue activity, service providers must comply with the requirements arising from the MiCA regulation, while a cryptocurrency service license must be obtained from Finantsinspektsioon.

The bill also lowers the threshold with regard to the securities prospectus requirement, which, according to the Ministry of Finance, may help to promote the development of the Estonian capital market.

Whereas if companies currently wish to raise capital in the form of shares or bonds to a sum greater than five million euros, they must prepare a lengthy and expensive securities prospectus, that threshold is being hiked to eight million euros, and the documentation itself is being streamlined.

Since Latvia and Lithuania have already made similar changes, the change also has a pan-Baltic unified capital market dimension.

If the bill drafted by the finance ministry is approved by the government and passes a Riigikogu vote, the new requirements it sets out will start to apply from the end of this year, alongside the transitional period with regard to RAB-issued license holders noted above.

--

Follow ERR News on Facebook and Twitter and never miss an update!