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The Ex-head of the Estonian Regulator To Lead the New Office of a Crypto Company


Denis Goncharenko

More and more specialists who have held positions in state institutions of financial and market regulation approve cryptocurrency and blockchain technologies. It became known that SG Veteris, a global cryptocurrency-based fintech services group, announced the appointment of Raul Malmstein, the former chairman of the Management Board of the Estonian Financial Supervision Authority (EFSA).

It is assumed that the ex-official will be responsible for establishing a new office in Estonia, as well as for securing the licensing procedure. Mr. Malmstein is also responsible for the day-to-day business activities of the company in Estonia, where he will focus on two main brands – Bitpace (instant payment processing services) and Koinal (which enables individuals to buy and sell cryptocurrencies).

SG Veteris, founded in 2016, is a global cryptocurrency-based fintech services group headquartered in London with offices in five countries. The group aims to introduce a risk-based approach to AML (anti-money laundering) and counter the financing of terrorism. According to a company press release, Raul's appointment puts it at the forefront of the market in preventing the aforementioned threats.

Why is Estonia so attractive to foreign companies?

A country with a population of only 1.3 million people has long been among the territories favorable for start-ups, including cryptocurrency ones. Last year, more than half of the world's registered Virtual Asset Service Providers (VASPs) operated within the country.

In 2017, Estonia became the first country to start issuing crypto licenses, which allowed hundreds of companies to start operating in the legal field, albeit relatively. However, year after year the crypto regulation in Estonia becomes more and more stringent. This is primarily due to the large number of fraudulent projects that appear on the market. Starting from June 15, 2022, the state introduces new rules, which mean that Estonian crypto companies will have to comply with updated transparency requirements; they will no longer be able to have anonymous accounts and must have a capital of at least EUR 250,000. A number of experts criticize the new rules as too heavy-handed, while the Estonian government says they are necessary.

In an interview with Euronews, Kristen Leppik, from Estonia’s financial services department, noted the following:

“We don't want to shut down the crypto wallets or we do not want to ban and trading in bitcoin or any other cryptocurrency. This is not our objective and we don't want to regulate any DeFi or mint NFTs. This is not our purpose. Its main purpose is to just foresee some general or most common investor protection rules also in this field.”

Given the tightening of legislation around the world, even in such crypto-friendly regions as Estonia, the appointment of former officials to key positions in a fintech company looks quite rational.

Raul Malmstein has almost 30 years of experience in the financial services industry. He held the position of chairman of the Management Board of the Estonian Financial Supervision Authority (EFSA) for eight years, being also the EFSA representative in the Committee of European Securities Regulators. Previously, he worked for several years at the Estonian Ministry of Economy and at Hansa Asset Management, a subsidiary of Hansabank. Malmstein himself commented on his own appointment:

“SG Veteris enables both businesses and individuals to take advantage of the opportunities offered by cryptocurrencies. This new role provides me with a unique opportunity to work at the frontiers in global finance and allows me to combine my experience in the financial services sector with that of being a creative builder of new organisations.”

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