Beginning in February, Estonia is set to introduce sweeping changes to its definition of Virtual Asset Service Providers, or VASPs, to include several cryptocurrency-related services — a move that could impact Bitcoin (BTC) ownership in the country — according to European compliance specialist Sumsub.
The draft bill was published by the Estonian Ministry of Finance on Sept. 21. This is part of the government’s efforts to stop money laundering and terrorist financing.
Sumsub reported that the legislation is currently under interagency review and will be implemented in February 2022. The deadline for crypto companies that are regulated to comply with the law is March 18, 2022.
Mikko Ohtamaa from New DeFi, CEO, stated that the new law effectively bans non custodial software wallets and decentralized finance products in Estonia. The bill’s provisions are designed to target VASPs in Estonia, which includes crypto exchanges and wallets. VASP will be expanded to include decentralized platforms, initial coin offering and other services when the bill is complete. Violations of these provisions could result in a $452,000 or 400,000 Euro penalty.
Ohtamaa interprets the new law as follows: “You can only hold your bitcoin in a custodial Virtual Asset Service Provider, (VASP) VASP can block your account. It is no longer your Bitcoin.
Estonia banned #defi and #bitcoin. Estonian law prohibits you from downloading wallets and holding #bitcoin.
— Mikko Ohtamaa (@moo9000) December 31, 2021
Related: Estonia’s crypto honeymoon comes to an abrupt halt as stricter regulations emerge
Estonia was the first country in the European Union that licensed cryptocurrency businesses. However, it had to stop after dirty money worth hundreds of billions was found in Danske Bank. This placed Estonia in the middle of Europe’s largest money-laundering disaster.
Cointelegraph reported that Matis Maeker (head of Estonia’s Financial Intelligence Unit) urged the government to repeal the regulations and allow licensing to begin again in October. He said that the public doesn’t know the risks inherent in cryptocurrency, particularly its role in terrorist financing and money laundering, as well as its vulnerability to cybercriminals.