Striga, formerly known as Lastbit, is the first company to be awarded a virtual asset service provider (VASP) license in Estonia under the amended Money Laundering and Terrorist Financing Prevention Act.
Founded in 2018, Striga is building a crypto-native banking as a service platform for card issuing, IBANs, managed crypto wallets with custody and trading, and compliance. The company has raised US$3 million in seed funding from Y Combinator and Brazilian venture capital firm Bossanova so far.
The license approval indicates that Striga has been able to meet the Estonian Financial Intelligence Unit’s (FIU) enhanced regulations which came into force earlier this year, including requirements related to the company’s financials, owners and management board.
The company said in a statement that it is “betting on the new Estonian regulation as a seal of prestige and quality.”
The Estonian Financial Intelligence Unit (FIU) started issuing virtual asset service provider (VASP) licenses in 2017. Requirements were lenient and allowed companies who were not connected to or did not operate in Estonia to be licensed.
In 2020, regulations were tightened, mainly by restricting VASPs from opening anonymous accounts and wallets, and requiring VASPs to apply know your client (KYC) principles the same way banks and payment service providers do.
381 licenses for the provision of virtual asset services were granted as of the end of 2021, of which 253 were actively operating with some two million active clients.
Another round of amendments were approved on 23 December 2021 and came into force on 15 March 2022, requiring licensees to either operate in Estonia or to have a demonstrable connection to Estonia.
“We’ve always viewed clearer regulation as a net positive, needed especially for a rapidly evolving industry like Bitcoin and crypto. Therefore, owning the crypto stack meant falling in line with a clear set of regulations that fit our business model and allowed us to build Striga,”
said Prashanth Balasubramanian, Founder and CTO, Striga.
Commenting on the amendments in an interview, FIU Director Matis Maeker said:
“The biggest challenge is striking a balance in the law to show those who should receive a license and be welcomed to Estonia that they are not going to find more lax and lenient countries.
I believe that we have a good balance. The key is not the strictness of the regulation but the quality of supervision and thus how protected the customers can be by “banking” with the service provider.”
Featured image credit: Edited from freepik
