In Estonia, nearly 400 virtual asset service providers (VASPs) have either been shut down voluntarily or had their authorizations revoked due to the recently enhanced anti-money laundering (AML) and terrorist financing prevention laws that came into effect in March.

The updated laws extended the scope of VASPs, mandated legitimate connections to Estonia, increased licensing fees, and imposed capital and information reporting requirements, as well as the Financial Action Task Force Travel Rule. As per a statement from the Estonian Financial Intelligence Unit (FIU) on May 8, nearly 200 domestic crypto service providers have voluntarily shut down since the amendment to AML laws on March 15.

In recent years, Estonia has made a deliberate effort to strengthen its AML laws due to the discovery that Danske Bank's Estonian branch laundered 235 billion USD of illicit capital in 2018. Additionally, Estonia's partnership with the U.S. has prompted strong AML regulation to cut off revenues supporting Russia's war machine and protect international financial systems amid the ongoing conflict with Ukraine.

Estonia's membership in the EU has also likely played a role in the enhancement of its AML laws as it will soon have to comply with the upcoming MiCA laws, which will impose strict AML and terrorism prevention requirements on crypto firms starting in early 2025.

Sources:

https://cointelegraph.com/news/estonia-squeezes-out-400-crypto-firms-after-new-laws

https://blockchair.com/news/estonia-squeezes-out-400-crypto-firms-after-new-laws--239717cc0b

https://www.advfn.com/stock-market/COIN/BTCUSD/crypto-news/90992191/estonia-squeezes-out-400-crypto-firms-after-new-la

https://www.investing.com/news/cryptocurrency-news/estonia-squeezes-out-400-crypto-firms-after-new-laws-3076638