The Great Estonian Exodus — Crypto Firms Are Leaving Estonia

The Great Estonian Exodus — Crypto Firms Are Leaving Estonia

Back in 2017, the Estonian government rocked the legislative side of the crypto world when they introduced a raft of new laws designed to support crypto projects. These licenses split into two different categories: those looking to operate a crypto exchange and those looking to undertake an initial coin offering. Both company types stood to benefit from the first “real” cryptocurrency licenses anywhere on the planet.

As a result of these licenses, entrepreneurs digitally flocked to the small but great Baltic nation. The Estonian government was ahead in a number of ways. Not only was the country a trailblazer with crypto licenses but it also offered the ability for citizens of any nation to obtain a “digital residence.” This digital residency permitted entrepreneurs to locate themselves or their companies in Estonia in a legal sense, thereby obtaining the desired crypto licenses much easier, even if they conducted business elsewhere in the world.

Related: E for Estonia: How Digital Natives Are Creating the Blueprint for a Blockchain Nation

This ultra-modern combination of digital residency and the ability to operate a licensed cryptocurrency firm impressed almost everyone in the crypto industry — especially those looking for transparency and security. In total, around 2,000 companies, just a half a year ago, have obtained cryptocurrency licenses since Estonia began issuing them (this number is based on all crypto licenses issued).

Fast forward three years to January 2020, the Estonian government began deploying new rules relating to the companies that have been issued a license and those wishing to apply for cryptocurrency licenses — laws that change the landscape and appeal of the cryptocurrency licenses offered by Estonia.

These new measures have been strategically implemented as a result of the new European Union Know Your Customer laws passed down by legislators the year before. In a nutshell, these new laws require member states to regulate operations of companies that work within the cryptocurrency industry. The overall aim of these new laws is to stop money laundering within the relatively unregulated industry; regulators and financial bodies have often cited this as their primary concern with cryptocurrencies, generally.

However, many observers have pointed out that the Estonian laws already met the new EU requirements. So, why were they implementing new rules?

Under the “old” license laws, companies applying for a license were required to appoint an individual responsible for the KYC aspect of the operation — essentially, a compliance officer. This individual would have to provide a certificate from their local police authority to certify a clean background. Additionally, there was a requirement that at least one of the directors was an EU resident and that the Estonian company had a registered address in Estonia. Such standard requirements for a financial license are quite enticing, especially if it only costs around $400 to obtain.

When the new EU laws are placed side by side with the old Estonian laws, one can see that they run almost parallel in their requirements.

The new Estonian laws, however, place a burdensome and overly complex regulatory obligation on firms looking to regulate themselves in the crypto space. It seems Estonia took a massive u-turn on whom it was attempting to attract for these licenses. If the old Estonian license laws were designed to attract cutting edge budget-strapped startups, then the new license laws are designed to keep them away.

The obligations for companies wishing to keep or obtain an Estonian crypto license now include elements, such as a local resident director, a local office and a $3,700 fee. This is quite a stark difference from the earlier price and obligations placed on companies. These new requirements in and of themselves do not seem burdensome. Naeem Aslam, a professional finance trader from London, did some research into what it takes to keep the Estonia-issued license, stating:

“The cheapest any company is currently offering Estonia compliance services for, charge in excess of $1,500 per month, including a one-off payment to become compliant.”

He went on to explain that during his research, “some companies that were contacted simply cited they were pulling out of the Estonia market and were unable to assist or give a price.”

This means companies now face the reality of a yearly fee between $18,000 and $20,000. Naturally, as anyone who has worked in the startup world will agree, $18,000 a year simply for a license, which can be obtained in another jurisdiction for a quarter of the price, is not an attractive or realistic prospect.

Consequently, the number of crypto companies leaving Estonia has skyrocketed. Many are looking toward the new United Kingdom Financial Conduct Authority crypto license or elsewhere in the world, such as countries that offer various “sandbox” licenses.

After having compared the crypto laws and the new European laws, many argue that the reason for this fee increase is simply nothing more than a cash grab. The Estonian government has been trying to leverage its position as a country with a large number of companies possessing these licenses, attempting to improve income for both the regulators and the domestic economy. If that was, as many suspect, the overall idea, it seems to have backfired dramatically.

Although many cannot blame Estonia for looking to capitalize on its newfound popularity within the crypto market, it will ultimately benefit the citizens of Estonia by doing so. Unfortunately, it seems that its plan to change the laws has become so cumbersome that companies are simply leaving to obtain other licenses, rather than comply.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Cal Evans is an international technology lawyer from London who studied financial markets at Yale University and has experience working with some of the best-known companies in Silicon Valley. In 2016, Cal left a top-10 California law firm to start Gresham International, a legal service and compliance firm specializing in the technology sector that now has offices in the U.S. and the United Kingdom.


Coinbase Lists Compound’s COMP Token for Retail Crypto Traders

Coinbase Lists Compound’s COMP Token for Retail Crypto Traders

Coinbase CEO and co-founder Brian Armstrong (CoinDesk archives)




Author: By TeamMMG

Apex Crypto News - How Bitcoin Empowers the Unbanked and Combats Injustice

Apex Crypto News – How Bitcoin Empowers the Unbanked and Combats Injustice

Plenty of injustice plagues our communities.

For instance, in our world, the unbanked and underbanked don’t have easy access to financial knowledge. All too often, that is reserved for people with wealth and opportunity. If you don’t have these resources shown or taught to you by a professional, you might not have adequate access to the necessary information for gaining financial literacy.

Such education often only comes as income increases. So, how might we increase the income of the unbanked so as to arm them with more knowledge? Many of those at lower socioeconomic levels don’t know what Bitcoin (BTC) is. That knowledge has not matriculated down from the crypto gurus or the finance experts to some of the less privileged economic classes.

The unbanked can be shielded from the ways in which our financial system is wildly unsustainable and plagued with inflation and debt. Money these days is just created “out of thin air” with no inherent value backing this paper currency. The media can sometimes articulate plainly how we have a fundamentally flawed financial system, but often dismisses the specifics that would arm people with more knowledge to navigate this ecosystem.

Bitcoin is the start of a plan to correct this fundamentally corrupt and unsustainable financial culture. Bitcoin represents an idea. A use case. A first pass at evolving a broken system. Bitcoin is a place where every human and every person becomes equal.

When you’re transacting with Bitcoin, your wallets are encrypted, as is your identity. No one knows who you are or how much money you have. There’s no space for prejudice, division or negative treatment. In such a financial utopia, we are not defined by what we look like, what we say, how we talk or how we may be different.

We as a society have a long way to go before implementing such an idea. We need to teach and reinforce why it’s beneficial to invest and save for the future. Or to seek a special tool and round spare change from everyday purchases into Bitcoin for the future, using a dollar-cost averaging strategy to mitigate volatility in a very high-fluctuating but high-reward asset.

In short, the concept of how a little bit of money can compound into a large windfall should be ingrained in our idea of finance. This concept has typically been reserved to the financially privileged. Many people that come from wealthy backgrounds are taught very early on to save money, invest and to build for their future — they’re taught to to use their money and make more money.

But many other communities lack that type of discipline or think they need thousands of dollars to get started. The result of this dichotomy is that 40% of Americans can’t afford an unexpected $400 expense. That means, if 40% of people were to blow two tires on their car, they all either can’t afford it or run out of money covering that expense.

The way to force change on this current topic of inequality and injustice is to empower people with knowledge and easy-to-use tools that assist in investing and saving. When it comes to financial literacy, this includes educating the unbanked about technology like crypto.

Nature adapts and evolves — so should we. We needed to recognize that this is a problem, and we have. The first step to solving any problem is admitting there is one. Now that we have, what can we do to change it? How can we adapt ourselves and our mindset, and change our outlook?

People are pondering different solutions, because the majority — or at least a growing number of people — are finding that the current solution doesn’t work for them. Inflation and debt are immense pain points in our system. Money being created out of thin air and backed by nothing isn’t sustainable.

That’s where the real innovators come in. Bitcoin represents the culmination of a group of people coming together and asking, “How can we improve this?” That’s how humans evolve. That’s how our financial system should evolve: by coming together and asking the question, “What can we do better?”

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Dmitri Love, the CEO at Bundil, suffered a serious knee injury while playing soccer during his study of biochemistry at the University of Arkansas. On the road to recovery, Love taught himself to code and became a software engineer. After learning about cryptocurrency and explaining it to friends and family, people would ask him how to buy it, but there were so many steps in the process. He thought to himself, “There must be an easier way for it to be done.” Dmitry then had the idea for Bundil, which allows users to invest their spare change into crypto and other assets. Bundil’s roundup plans enable users to invest intelligently.


Crypto Industry Now In Post-Dotcom Bubble Territory, Trading Expert Says

Crypto Industry Now In Post-Dotcom Bubble Territory, Trading Expert Says

Crypto’s atmosphere currently looks like the period following the dotcom bubble’s bursting, Paul … [+] Eisma, Head of Trading at XBTO Group, explained.

Hosting a booming period of online creation and technological advancement, the late 90s saw the tech bubble expand to staggering heights, only to pop shortly after the new millennium began. Speculative investments and trading facilitated rapid market gains, for a time, until the party ended in the early 2000s. The cryptocurrency industry saw a similar bubble in 2017. Was 2017 and early 2018 crypto’s dotcom boom, or is it still coming?

“We are in a market state similar to the post-dotcom boom where there are higher quality projects and companies building for the long term,” Paul Eisma, head of trading at XBTO Group, told me in an email on May 20, 2020.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

The Crypto Bubble Of 2017

With bitcoin leading the charge, 2017 yielded incredible price gains for the crypto markets. Between January and December 2017, bitcoin rose from less than $1,000, all the way up to almost $20,000, based on data. Crypto’s total market cap also saw dramatic rise between January 2017 and January 2018, spiking from approximately $14 billion, to above $750 billion.

Bolstering the hype, initial coin offerings (ICOs) gained popularity as a new method of fundraising. Many ICOs raised millions of dollars on speculation and marketing. Crypto’s major bubble began to burst in January 2018, however, with the entire market suffering significant losses by the end of that year.

The Dotcom Bubble Of The Late-90s

Similarly, the latter half of the 90s also saw rising stock prices as speculative investors piled into the latest early-stage website businesses offering online solutions, such as shopping. With the expansion of the internet came increased potential for entrepreneurs, visionaries and profit-seekers.

People with new business ideas whipped up websites and companies, often with business development and profitability taking a back seat to marketing. Many startups launched initial public offerings (IPOs), listing their stock shares on the mainstream market. Stock prices rose as people invested significant speculative capital into new companies, regardless of those companies’ profits, or lack thereof.

Post-Bubble Territory

Eisma mentioned a similar potential situation around crypto assets. “The ‘irrationally exuberant’ 2017 speculative coin bubble was followed by the painful, necessary cleansing of the ecosystem in 2018,” Eisma said.

Riding the fad and hype of blockchain and cryptocurrencies in 2017, many startups looked to apply the technology wherever they could, regardless of feasibility.

“Many projects that had no true utility, no use case or need for a token (why do you need a token?), no need for a distributed database (why do you need a blockchain?), no product, and no realistic build out, deserved and needed to go to zero,” Eisma explained.

Bitcoin’s Position

How does bitcoin play into the mix? “The recent halving event gave us a reminder of the original value proposition of bitcoin,” Eisma said referring to when bitcoin’s mining reward cut in half on May 11, 2020, as a scheduled part of its code. The halving essentially decreased the amount of fresh bitcoin entering the market through mining.

The final block prior to the halving, as well as bitcoin’s first mined block in 2009, showed inscribed messages on the state of the U.S. economy. “We are reminded that bitcoin is a non-government controlled, decentralized, programmable, disinflationary digital asset that could potentially serve as a store of value, medium of exchange, and unit of account for a digital present and future,” Eisma noted.

“These characteristics are valuable and timely given the current global macro environment and pandemic,” he said.

“Over time, we’ll understand that we are at the dawn of an evolution of a technological, digital monetary system where bitcoin will potentially serve as the base of a Bretton-Woods-like global digital standard.”

Disclaimer: I actively trade cryptocurrencies, as well as hold a small amount of BTC, ETH, LTC, XMR, NEO, ZEC, BEAM, BCH, DASH, LINK, XTZ and various insignificant other altcoin positions.


Author: Benjamin Pirus

Vanguard’s Blockchain Platform for Foreign Exchange Will Go Live in Q3 2020

Vanguard’s Blockchain Platform for Foreign Exchange Will Go Live in Q3 2020



Author: by admin

Vanguard's Blockchain Platform for Foreign Exchange Will Go Live in Q3 2020

Vanguard’s Blockchain Platform for Foreign Exchange Will Go Live in Q3 2020



Author: By OneCryptoNews

The Great Estonian Exodus — Crypto Firms Are Leaving Estonia

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