Today, cryptocurrencies emergence is at a meteoric rate which is the main reason to grab the attention of the investing financial and public institutions. Nowadays, cryptocurrency has been declared legal. As compared to other EU member-states, cryptocurrency regulations are very innovative and open in Estonia. After the 2017 AML/CFT legislation, exchanges are now legal there which operate under a proper regulatory framework. Have no idea about what cryptocurrency is? Then, this article will help you to understand the basics.
What is a cryptocurrency?
Cryptocurrency is a digital currency technique which works as a medium for exchange that uses firm cryptography to secure all the financial transaction, manage the creation of extra units, and verify the transfer of assets. The cryptocurrencies have limited entries in a database that you cannot change unless all the specific conditions are not full-filled. It is a high-risk investment.
Most of the cryptocurrencies have the decentralized network, where every single participant needs to finish their job via a blockchain- it is a public ledger that is within the network, available to everyone. However, each individual in the network can see every account. Each transaction will be in a file format, which will contain senders and recipient’s account address and the number of coins that got transferred.
Let’s now have a closer look at the cryptocurrency regulations in Estonia.
Regulations of Cryptocurrency in Estonia
The cryptocurrency regulations in Estonia are open and creative, particularly when compared with the other EU states. Although it doesn’t come under a legal tender, the government of Estonia considers the cryptocurrency as the value that is in the digital form. Estonia is the first EU country that has given a clear regulation of cryptocurrency.
As per the Anti-Money Laundering and Terrorism Finance Act of 2017, they introduced a few new regulations in the crypto industry. After the AML/ CFT of 2017, it is operated under a well-structured regulatory agenda which includes firm reporting and KYC rules.
A various number of crypto initiatives were regulated including a speculative government plan for introducing the “estcoin”, which is a national cryptocurrency. After the criticism of the EU, the government step out of the plan, but still wants has the potential of continuing the usage of estcoin within the government.
After the adoption of the regulatory framework of the previous year, the Financial Intelligence Unit has given license for around 1,000 entities. The regulator considers only two types of licenses. As per the data quoted by the Estonian news outlet Err.ee, 444 wallet providers and 526 cryptocurrency trading platforms are currently licensed to operate in every single portion of the country.
Along with the other countries like Switzerland, Belarus, Malta, Gibraltar and the Isle of Man, Estonia is one of the several jurisdictions that quickly started the adoption of cryptocurrency regulations all over Europe.