In Brief:
- The Estonian government has come up with FAQs to clarify doubts over new crypto regulations.
- The FAQ clarifies that the regulatory bill does not ban customers or individuals using private wallets from owning crypto.
- VASPs are required to have a license and also follow the travel rule, which means that customers must be identified for the data to be passed.
The Estonian government has released a series of frequently asked questions (FAQs) to drive off fears and doubts over new crypto regulations. The new regulation has led to ‘false assumptions’ that crypto legislation is similar to a crypto ban, hence, the FAQs by the government.
The regulatory bill laid down by the government was an effort to comply with recommendations from the Financial Action Task Force (FATF). FATF had recently released guidelines for nations advising stricter anti-money laundering standards for companies that manage digital assets.
The bill, which comes into full effect in the first half of 2022 is for the regulation of Virtual Asset Service Providers VASPs in accordance with e-money institutions and payment service providers.
However as suggested by the FAQ, it does not ban customers or individuals using private wallets from owning crypto. Even so, Estonian VASPs are prohibited to provide anonymous services and must identify their clients.
Thus, VASPs are asked to obtain a VASP license for a fee of 10,000 euros along with meeting capital requirements. They are also required to pay a supervision fee of 1% of share capital and 0.035% of all virtual asset transactions so that dormant firms can be kept away from registering.
The FAQ also states that there are no measures to ban customers from owning and trading virtual assets. Customers are also not required to share their private keys to wallets. Individuals can still freely use non-custodial wallets.
VASPs are required to follow the travel rule, which means that customers must be identified for the data to be passed. The travel rule is to reduce exploitation of the financial system for malicious purposes like money laundering, fraud, or other financial crime.
Interestingly, it is also informed in the FAQ that transactions between VASPs and un-hosted wallets are permitted given “real-time risk analysis is performed on each transaction”.
