Finland Begins Regulating Crypto Service Providers

Finland’s president has approved a law to regulate cryptocurrency service providers including exchanges, custodian wallet providers, and issuers of cryptocurrencies. The law will enter into force next week. Crypto service providers will need to register with the country’s Financial Supervisory Authority and meet statutory requirements.

Finland Approves Crypto Law

Finland’s Ministry of Finance announced Friday that the president of the country has approved the Act on Virtual Currency Providers. The Finnish Financial Supervisory Authority (Fin-FSA), responsible for regulating Finland’s financial markets, independently announced Friday:

The Act on Virtual Currency Providers enters into force on 1 May. In accordance with the act, the Financial Supervisory Authority (Fin-FSA) will act as the registration authority and supervisory authority for virtual currency providers.

Registration Requirements

The Fin-FSA explained that registration is required for “virtual currency exchange services,” “custodian wallet providers,” and “issuers of virtual currencies.” These providers must comply with statutory requirements. For example, they must be reliable and able to hold and protect client money. They must also segregate client money from their own funds and comply with AML and CFT regulations.

The Finnish financial watchdog elaborated:

Going forward, only virtual currency providers meeting statutory requirements are able to carry on their activities in Finland. Virtual currency providers which do not comply with statutory requirements will be prohibited from continuing their business activities, enforced by a conditional fine.

The law has a transitional provision which allows existing crypto service providers to continue to operate in the country without registration until Nov. 1. The Fin-FSA will hold a briefing on May 15 at the Bank of Finland to explain the new rules to both existing crypto service providers and those planning to start offering related services.

Complying With EU’s Legislation

The Fin-FSA noted that these new requirements are based on the May 2018 amendments to the EU Anti-Money Laundering Directive (the Fifth Money Laundering Directive), adding:

All EU member states must include services related to virtual currencies within the scope of AML/CFT legislation by 10 January 2020.

Further, registration with the Fin-FSA does not allow the service provider to operate in another EU country as each member state has its own law that must be followed.

Prior to the president approving the law, Helsinki-based crypto marketplace Localbitcoins announced that it had been working on improvement measures to conform to the new regulation and had launched “a new account registration process where users can verify basic information already during sign-up.”

Images courtesy of Shutterstock.

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