Eesti, the Estonia-based consulting firm yesterday revealed that cryptocurrency licensing has become one of the most controversial topic in the country for a while. Upon press release, the consultancy stated that getting issued with cryptocurrency license in the territory has become quite difficult due to strict regulations imposed by the local government.
Cryptocurrency business and startups in EU region saw massive growth in 2-3 years’ span. The companies are looking to get multiple licenses in order to expand their operations across the union. But according to the current situations, the crypto-friendly ecosystem is confined to Malta, Gibraltar and Switzerland.
On 3rd May, the Estonian government made amendments in the cryptocurrency licensing regulations that included several obligations which were not quite favourable for crypto-based initiatives. The regulatory move came as a serious strain for many crypto firms and nightmare for startups.
Regulation detailed that:
If acquiring a license took around a month before the amendment, it now takes a little more than 3 months, which increases costs and decreases revenue, a nightmare situation for any business. The board of executives and directors, as well as the Headquarters of the company, needs to be located in Estonia, for it to have any chance at acquiring a license.
Moreover, regulation is not just confined to the cryptocurrency space since traditional financial markets too have been impacted. Therefore there is a need to consider another amendment that could result in onboarding local candidates for the executive positions.
Being a tech savvy nation, the country’s regulators have biased decisions for cryptocurrencies. The recent amendment also brought about increment in the cryptocurrency licensing fees which according to the crypto community an insult to the country. Last month, the charges for the companies to get licensed was a nominal fee of €345 ($386). However, with the changes in the regulation, the companies now need to pay €3,330 ($3,729).
Martin Helme, minister of finance stated the reasons behind 1000% increment of licensing fees:
We have learned our lesson from the banking sector the hard way, and we must now deal with new international risks, with cryptocurrencies among the most urgent of these.
Earlier, the EU nation had been highlighted of notoriety like banking scandals with overseas companies. Helme claimed that the country must not take risks with financial institutions again and therefore a financial bill to counter such situations is need of the hour. In contrast, the new regulation has imposed unnecessary barriers for growing companies or aspiring startups in the country.