Estonia has moved to calm investor fears about tougher rules on cryptocurrency, a sector that has been a target of regulatory scrutiny for the Baltic nation since at least 2019.
The country is considering new rules that would enforce due diligence, audits and higher levels of capital for crypto firms ahead of a review of its policies to counter money laundering this quarter.
The proposed rules still need parliamentary approval.
Photo: Bloomberg
The Estonian Ministry of Finance issued a statement and a list of frequently asked questions after speculation that the new rules would shut down cryptowallets and ban trading in bitcoin.
Estonia “recently introduced draft legislation that would tighten regulation of virtual asset service providers,” the ministry said in a statement.
“However, Estonia has no plans to make owning cryptocurrencies illegal, as some misconceptions on social media claim,” it said.
The Baltic nation was one of the first countries to grant cryptocurrency licenses in 2017, attracting a surge in companies interesting in doing business in the sector.
It has since revoked about 2,000 of these and only about 400 licensed companies remain.
Estonia took a tougher stance on crypto after allegations that billions of dollars of illicit cash flowed through the local unit of Denmark’s largest lender Danske Bank A/S, in what was then Europe’s biggest ever dirty-money scandal.
Estonian Financial Intelligence Unit director Matis Maeker told local media in October that all cryptolicenses could be revoked and companies forced to reapply for accreditation.
His spokesman later said that this was not the official view of the agency and the government did not pursue it.
Separately, bitcoin is starting off the new year on a down note.
Bitcoin, which is the largest digital coin by market valuation, fell as much as 2.8 percent during Monday’s session to US$45,715.
That means it was trading below its average price over the past 200 days, which currently stands at US$47,923.
The session is setting bitcoin up for its seventh consecutive close below that threshold, which is watched closely by chartists.
“Bitcoin is acting just like another risk asset,” said Steve Sosnick, lead strategist at Interactive Brokers LLC. “In some ways, it’s a victim of its success, because so much risk capital has moved into bitcoin and to a certain extent other cryptos.”
Technicians are also watching bitcoin’s relative strength index, which is nearing oversold territory.
Strategists at Oppenheimer say that bitcoin’s heightened volatility makes it difficult for them to trade.
Still, if they use its 200-day moving average stat in the same way that they utilize it for stocks, then they foresee it could break above US$65,000 — as long as it maintains US$46,000, they said in a note.
Cryptocurrencies overall finished last year on a sour note. Bitcoin fell roughly 19 percent last month, one of its worst months of the year.
The Bloomberg Galaxy Crypto Index, which tracks a handful of some of the largest coins, lost nearly 23 percent in that period.
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