Estonia’s chief financial regulator has said he wants to revoke all currently issued digital currency licenses and start again, effectively replacing the current regulatory regime with an entirely new structure.
Matis Mäeker, head of Estonia’s Financial Intelligence Unit (FIU), said the state should consider scrapping regulation “to zero and start licensing all over again,” over concerns about the impact of the sector, and the risks of money laundering and other illegal activity in BTC.
Mäeker said the public at large was not aware of these risks in and around the digital currency sector, including terrorism financing, nor the risks of hacking, theft, and other types of crime committed against digital currency users.
“These risks are very, very high. We need to react cardinally and very quickly,” he said.
Some 400 firms in Estonia hold digital currency licenses at the moment, or virtual asset service provider licenses. According to the FIU chief, this is more than the total number of licenses that have been issued across the rest of the EU combined, with Estonia emerging as something of a hotbed for the sector in recent months.
However, Mäeker said the current regime allows companies to “turn over very large sums, while Estonia gets nothing out of it,” with the sector doing little to create jobs or contribute tax revenue within the country.
He proposed an alternative system of regulation which would implement higher capital requirements, as well as more stringent security measures for IT systems and networks. Mäeker’s new proposals would also prohibit investment in exchanges in anything other than cash to deliver heightened protection for investors.
It comes following a major crackdown in Estonia on digital currency companies, which saw the FIU revoke as many as 70% of the licenses previously issued, with a total of 1,808 licenses revoked in December 2020.
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