Estonia's new anti-money laundering law will crack down on the crypto industry

Beginning in February, Estonia will comprehensively revise the definition of its virtual asset service provider (VASP) to include multiple cryptocurrency-related services. This move may affect the country’s ownership of Bitcoin (BTC).

It is reported that on September 21, the Estonian Ministry of Finance issued a draft bill to update the Anti-Money Laundering and Terrorist Financing Prevention Act (AML Law) as part of the government’s efforts to prevent money laundering and terrorist financing.

The legislation is currently in the process of inter-agency review and will be implemented in February 2022. Regulated crypto companies must make their operations and paperwork compliant by March 18, 2022.

According to New DeFi CEO Mikko Ohtamaa, the updated law effectively bans non-custodial software wallets and DeFi products in the country. This is because the terms of the bill target Estonia's VASP, including cryptocurrency exchanges and wallets.

After the bill is ready, VASP will expand to decentralized platforms, ICOs and other services. Violation of the regulations may result in a fine of up to 452,000 U.S. dollars or 400,000 euros. According to Ohtamaa’s explanation, the new law has the following effect: “You can only hold bitcoin in the hosting VASP. VASP can freeze your account. So it’s no longer your bitcoin.”