Estonia positioned itself as a crypto hub for any crypto related-company looking for a serene operating environment. But as it has turned, the Baltic nation is looking to denounce its crypto hub status due to some lessons learned the hard way.
According to the country’s deputy central bank governor, Madis Muller:
There is money laundering risks with cryptocurrency operators. We have made it too easy for these crypto operators now. They get a reputational benefit from their link to Estonia. We get the reputational risk.
Estonia is even contemplating giving law enforcement agencies the power to question and vet crypto operators in the country. The screening would also seek to establish the qualifications of those in the management levels of these crypto companies.
With Estonia supporting e-residency programs where you can be issued with a digital identity by filling an online form, the Baltic nation may soon require crypto companies to prove their presence, business-wise, for them to keep their license.
Muller notes that since most of the crypto firms do not have a business presence, they risk their licenses being canceled.
By being an e-resident, you are entitled to access the country’s banking system. It also allows a business to be registered here even without ever physically visiting the country. This has made Estonia home to roughly six hundred cryptocurrency companies.
Estonia’s move to denounce its crypto hub status comes after one of its banks, Danske bank, was alleged to have contributed to the 2018’s largest money laundering operations to a tune of 227 billion U.S dollars.
According to Reuters:
The Danske debacle was rooted in old school subterfuge – offshore shell companies were used to disguise where the money was coming from.
The country’s Financial Intelligence Unit head, Madis Reimand, noted that cryptocurrencies have the ability to put Estonia on the same spot they’ve been put by offshore companies.
Although Estonia is seeking to denounce its crypto hub status, do you think favorable regulations will help it regain the title over time?
Let us know your thoughts in the comments section below.