Finland decided to follow the example of other countries and adopted a separate legislative act at the national level with the aim of regulating issues related to the circulation of crypto assets.
The active development of the regulation of virtual assets in the countries of the European Union began after the adoption of the joint proposal of the European Parliament and the European Commission “On Cryptoasset Markets” on September 24, 2020. However, Finland was concerned about the regulation of crypto markets a little earlier and adopted the Law “On Virtual Currency Providers” (hereinafter referred to as the Law), which came into force on May 1, 2019. The said Law governs the following:
- rules and procedures for issuing virtual currency,
- the procedure for providing virtual currency exchange services; as well as
- the procedure for providing custodial wallet services.
Article 2 of the law in established what should be considered a cryptocurrency; accordingly, a cryptocurrency is a measure of value in digital form, which:
- was not issued by the central bank of any state or other government body;
- is not legal tender;
- is a means of payment;
- may be transferred, stored or exchanged electronically.
Despite the presence of a definition in the Law, at the moment there is no difference at the legislative level between different types of cryptocurrencies, and different types of tokens (for example, utility or security tokens) are not defined. Therefore, the question of whether a particular crypto asset or token falls under the scope of the Law on Providers of Virtual Currency must always be considered on a case-by-case basis analysis.
Regulator and Authorization
In Finland, issues related to supervision and regulation of the financial sector are regulated by a separate body — the Financial Supervisory Authority, or FIN-FSA to be shorter. According to the Law and related regulations, in order to carry out the abovermentioned activities, individuals and legal entities must register with FIN-FSA. Registration is mandatory for – “virtual currency exchange services”, “custodian wallet providers,” and “issuers of virtual currencies.”.
At the moment, there are only 3 exceptions in Finnish law, in which a person who is engaged in activities related to crypto assets should not be registered. Entities who carry out the following services are exempted from registration:
- provision of services with virtual currency in a limited or closed network;
- provision of virtual currency services not on a permanent basis in connection with the implementation of other activities that require separate licensing, registration or authorization;
- carrying out activities with virtual assets that are issued by government agencies.
The full list of registered virtual asset service providers are open to public and can be accessed on the FIN-FSA’s website in the section ‘Registers’ under ‘Lists of supervised entities’.
The main problem regarding the implementation of virtual currencies in Finland is that, according to the Law, registration in FIN-FSA can only be obtained by a person who has the right to do business in Finland, which forces such a person to go through additional bureaucratic procedures to carry out activities, as well as register a company or a branch in Finland. Also among the mandatory requirements in the Law there are provisions on the marketing of the services of a virtual currency provider. Thus, the registrant is obliged to provide clients with information that may concern them, while the scope of such information must be determined in each specific case and in relation to each of the clients. Providing false or other information that is misleading is prohibited, as well as other unfair or discriminatory treatment of the client.
For registration it is necessary to submit an application for registration to FIN-FSA by means of a written application for registration in Finnish or Swedish along with the required documents. It is also possible to submit an application with attachments in other languages, however, this requires prior approval from FIN-FSA.
Registration is required to ensure customers that virtual currency providers comply with their legal requirements regarding:
- reliability of the provider, which consists in its compliance with legal requirements;
- storage and protection of clients’ money in accordance with applicable law;
- separating the funds of the provider and the funds of customers that he receives in connection with the activities carried out;
- compliance and continued compliance by the provider with marketing requirements;
- compliance by the provider with the legislation on combating money laundering and the countering terrorism finacing.
Going forward, only virtual currency providers meeting statutory requirements can continue their activities in Finland. Virtual currency providers failing to comply with statutory requirements will not be allowed to do business in Finland, conditional fine might be enforced against them.
Делая выводы из вышеизложенной информации, следует сказать, что, несмотря на принятое национальное законодательство, следует также обратить внимание на законодательство ЕС в отношении криптовалют с учетом специфики правовой системы ЕС. Основной проблемой предоставления услуг с виртуальными валютами в Финляндии является проблема с трансграничным оказанием таких услуг, что вытекает из требования иметь компанию или филиал в Финляндии. Поэтому сейчас необходимо внимательно следить за развивающейся правовой базой в ЕС, особенно за процессом принятия регламента «О рынках криптоактивов», который позволит вам более тщательно прогнозировать развитие бизнеса и оценивать риски, если вы хотите работать в Финляндии.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.