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Estonia may tighten regulation of its cryptocurrency and token market as concerns about money laundering persist in the otherwise crypto-friendly nation. The country’s Financial Supervision Authority (FSA) will target companies that provide access to crypto-related services, local financial news outlet Aripaev reports.

Exchanges would be most vulnerable in case of a regulatory beef-up. Demanding that trading platforms comply with anti-money-laundering (AML) laws and perform KYC (know your customer) due diligence has become the norm, with almost no markets remaining unaffected.

But like many other regulators, Estonia’s financial oversight body is mostly concerned with the moment cryptocurrency is bought or sold for fiat. Directly regulating a blockchain or stopping it has not happened in any country or region.

Estonia has become one of the highly active markets for token sales and initial coin offerings (ICOs). One of the reasons is the ease of registering a business in Estonia, which has made it the home base of choice for several startups. During boom times, Estonia was among the top 15 countries for raising funds through an ICO, according to research by Ernst & Young.

However, Estonia has never been a free-for-all country when it comes to token crowdsales. The FSA has noted it will scrutinize all token sales on a case-by-case basis, suggesting that despite the technology used, some digital assets may be counted as securities, thus falling under local security regulations.

Additionally, Estonia seems to have given up on a national cryptocurrency, the Estcoin. Such an asset does not exist on Etherscan and was most likely a theoretical possibility. Estonia is part of the eurozone, with no possibility of creating another national currency.

There are just nine functioning Bitcoin nodes in Estonia, which is a relatively low number for a European country. This figure is an indirect indicator of how dedicated the local crypto community is.

In the past months, the climate for crypto projects has worsened as local regulators examine several issues and aim to restrict unmonitored cryptocurrency trading. In theory, cryptocurrencies could be used to hide or move assets, but due to price volatility and limitations on trading, it is not that easy in practice.

Source: https://cryptovest.com/news/estonia-prepares-to-tighten-cryptocurrency-regulation/