Estonia Revamps Crypto Regulation Framework, Setting New Oversight Standards

Estonia has introduced a comprehensive overhaul of its crypto regulation framework, signaling a significant departure from its previous approach and establishing stricter oversight measures for digital asset businesses. Starting from 2026, crypto firms will fall under the rigorous surveillance of the Financial Supervision Authority, marking a shift from the previous focus solely on anti-money laundering efforts.

Matis Mäeker, leader of the Financial Intelligence Unit, highlighted the necessity for crypto companies to adopt robust systems akin to traditional banks to effectively safeguard client assets. This shift in approach has led to a significant reduction in the number of crypto entities in Estonia, from thousands to around 50, reflecting the country’s crackdown on non-compliant firms.

The new legislation elevates operational and reporting standards while imposing fines of up to €5 million ($43,290). Finance Minister Mart Võrklaev emphasized that companies must adapt to these stringent requirements by 2026 to retain their operational status, underlining the seriousness of compliance.

Estonia’s proactive regulatory stance aims to combat financial malpractice and bolster the security of its digital economy. As Estonia implements these new rules, the crypto landscape in Europe is expected to become more structured and transparent.

In parallel developments, OKX, a prominent crypto exchange, has declared its withdrawal from India as the country intensifies its regulation of cryptocurrency operations. Citing local regulatory challenges, OKX has advised its Indian customers to withdraw their funds by the end of April.

India’s integration of crypto into its anti-money laundering and counter-terrorism framework in 2023 prompted a reassessment within the crypto sector. The heightened scrutiny by the Indian government has led to the removal of several crypto apps from digital platforms, impacting industry giants like Binance and Kraken, although OKX was not explicitly mentioned by the Financial Intelligence Unit (FIU).

India’s stringent tax policies on crypto transactions, including a 30% tax on gains and a 1% deduction on each transaction, have further complicated matters. The demand for comprehensive know-your-customer (KYC) checks has added strain to the operational capabilities of global crypto platforms amidst India’s evolving regulatory landscape.