New Crypto industry regulations in Estonia, March 2022

Dear Crypto market participant!

Please find below our update on the latest virtual currencies market developments in Estonia. As a result of Estonian Authorities hard work to mitigate virtual currencies market related risks on 23.02.2022 Estonian Parliament adopted in the third (and final) reading the following changes into the current Money Laundering and Terrorist Financing Prevention Act:

1. Extension of the scope of virtual currency services (previously two options: virtual currency exchange and wallet). New law will define 4 services:
   1. wallet
   2. exchange
   3. transfer
   4. issue of a virtual currency (and organization of its offer, sale and provision of related financial services)
2. New share capital requirements (previously 12 000 eur):
   1. at least 100 000 eur for companies providing virtual currencies wallet, Exchange and issue services
   2. at least 250 000 eur for companies providing transfer services

In both cases share capital must be paid up in full by monetary contribution

3. State fee 10 000 eur (previously 3300)
4. New requirement towards own resources of a virtual currency services provider that at all times must make up one of the following amounts, whichever is bigger:
   1. share capital
   2. amount that is calculated by specific scheme depending on the services provided*

*for a more detailed information please check §72²

https://www.riigikogu.ee/tegevus/eelnoud/eelnou/ffe848a6-7b78-43cf-b106-720915882205/Rahapesu%20ja%20terrorismi%20rahastamise%20t%C3%B5kestamise%20seaduse%20ja%20teiste%20seaduste%20muutmise%20seadus

5. Restriction for transfer of license: а license for provision of the virtual currency service is no more transferable
6. Approved obligation for an annual audit
7. Approved obligation for an internal audit
8. New increased requirements concerning board members, contact person (AML specialist) and place of business:
   1. virtual currency service provider’s board member cannot have a position of a board member in more than 2 virtual currency service providers
   2. virtual currency service provider’s contact person (appointed under current AML Act § 17) cannot be a contact person in other virtual currency service provider
   3. actual place of business and registered office must be in Estonia. In addition, at any time there must available access to data collected and stored by virtual currency service provider for Supervision Authorities
9. There is also an entire list of new enhanced due diligence requirements concerning virtual currencies transactions counterparties identification and transactions’ related data collection and storage. Consequently, more significant internal AML and IT procedures must be set up under new Act. .

New AML Act will come in force on 15.03.2022. New requirements must be adopted and implemented by 15.06.2022