Estonia’s Financial Intelligence Unit has granted FintechX OU, the company operating the Kriptomat platform, a license to provide virtual currency services under a new licensing regime introduced in March 2022.

Renewal required Kriptomat to meet several stringent requirements intended to protect customers and their assets:

• External and internal audit functions
• Higher capital requirements and regular audits of reserves
• Enhanced risk management and corporate governance
• Security measures and operating procedures
• Viable business plan

“We welcome clear, strict regulations that benefit customers and help root out companies that are poorly managed to prevent financial crime,” says Chief Operating Officer Dejan Davidovic.

In 2018, Estonia issued about 1,200 licenses to crypto projects. As of now, only about 30 companies are licensed under the new guidelines. “We’re proud to be among the few Estonian fintech services willing and able to protect customers by meeting the strict regulatory requirements,” Davidovic says.

“Implementing pragmatic and well-considered fraud detection and customer protection measures had already been an integral part of our operational approach,” says Chief Compliance Officer Viljar Kähari. “This strategic orientation potentially provided us a modicum of advantage in navigating the relicensing process.”

Kriptomat supports regulations that protect customers and their crypto assets. “Many potential crypto users hesitate because they fear their investments won’t be properly secured – and with good reason!” Davidovic says. “The last decade’s crypto boom attracted too many shady projects run by people who saw crypto as a get-rich scheme. We saw too many people losing money when they placed their trust in projects that were poorly managed, using customers’ assets for their own investments, implemented poor risk management, or operated off-shore with poor compliance requirements and almost no supervision.”

Kriptomat worked closely with Estonian government authorities to define and refine regulations to safeguard customers and their assets. “Our commitment to transparent communication enabled us to foster a constructive discourse with regulatory entities,” Kähari says.

One result is that Estonia’s new regulatory framework provides unambiguous clarity to crypto users and the companies that serve them. “Much of the controversy over crypto in the United States and other countries has come from a lack of regulatory clarity,” Davidovic says. “For crypto to reach its potential, more countries should follow Estonia’s lead in defining clear, unambiguous guidance to crypto companies.”

Kriptomat’s position is that strict, unambiguous regulations help safeguard everyone involved in crypto. “We believe the new licensing regime will help build trust in Estonian crypto companies,” Davidovic says, “both for customers and other market participants: banks, auditors, insurance companies, and others.”

Meeting Estonia’s strict requirements has given Kriptomat a head-start in addressing the European Securities and Markets Authority’s Markets in Crypto Assets (MiCA) regulations, which began phasing into effect throughout the euro market in June 2023.

“At their best, regulations define procedures and business practices that are necessary to protect customers,” says Kähari. “Since that is a non-negotiable priority for us, we are happy to work with regulators and adopt required practices that serve our customers and protect their assets.”

In conclusion, the accomplishment of securing a new license under Estonia’s rigorous regulations is a testament to the dedicated leadership and relentless commitment of our key senior leaders. Chief Compliance Officer Viljar Kähari, who played a crucial role in guiding our compliance strategies, Chief Operating Officer Dejan Davidovic, whose operational insights and strategic work with multiple regulatory bodies from EU member countries on Anti-Financial Crime were instrumental in meeting regulatory demands, and Irena Dimitric, our Chief Legal Officer, whose legal expertise was invaluable in navigating the complex regulatory landscape. Together, they have enabled Kriptomat to uphold the highest standards of customer protection and integrity within the crypto market. This achievement sets a new benchmark in our commitment to innovation, transparency, and excellence, positioning us at the forefront of the Estonian fintech industry.