Nearly a year since Estonia’s initial introduction of licensing requirements for crypto-related startups, the Baltic country has so far granted over 900 licenses, as it moves to adopt a more progressive approach to crypto regulations, while local banks still remain reluctant to provide banking services to firms operating in the crypto industry.
As one of the first European Union jurisdictions to legitimize activities involving digital assets, Estonia currently grants two types of licenses. According to Nikolay Demchuk from the law firm Njord, while the country has so far issued roughly 500 licenses to crypto exchange platforms, around 400 licenses have also been granted to digital wallet providers, Russian news outlet Bitnovosti reported.
Recently, Njord has published a summary of the current situation on crypto licensing in Estonia, providing data aggregated from the Register of Economic Activities. As explained in the report, securing a license from the Estonian Financial Intelligence Unit (FIU) is relatively uncomplicated.
While the FIU generally reviews each licensing application for a period of 30 days, most crypto startups obtain the FIU’s approval in as little as one to two weeks. However, there is a possibility of revocation should the company fail to initialize operations within a period of six months upon the license issuance.
Generally, the primary requirements firms need to meet mostly concerns adherence to a number of know-your-customer and anti-money laundering regulations. As it stands, crypto startups currently registered in Estonia falls within the EU’s sovereignty, requiring such firms to remain in compliance with prevailing domestic and European laws.
While Estonia has so far maintained a crypto-friendly regulatory environment, traditional financial institutions in the jurisdiction still remain reluctant to address the needs of the nascent industry, as it fails to keep up with the country’s regulatory efforts. Restriction to banking services still remains a major obstacle for crypto firms and FinTech enterprises operating in the country, of which a majority have been prompted to consider working with banks overseas that are willing to serve as payment providers.
As Nikolay Demchuk stated:
“Opening a bank account is the biggest problem facing crypto companies. Estonian banks are not yet ready to serve clients operating with cryptocurrency.”
Despite this, Estonia still draws in a multitude of investors and crypto firms largely due to its favorable condition. In June, regulators have granted a number of licenses to digital wallet providers as well as digital currency trading platforms, including Coinmetro. That same month, Ibinex, a startup focused on providing white label solutions as well as trading software, has also secured a license from Estonian regulators.
In September and just this week, the FIU has also approved two more licensing applications filed by digital currency exchanges Ironx and B2bx.