How to obtain a cryptocurrency license in Finland

Regulation of the cryptocurrency market is constantly becoming stricter. Nowadays jurisdictions impose high regulatory and risk management requirements on virtual asset service providers.

Despite this, we always manage to find a solution that suits the client. All the time our team provides research of the market and regulations on various markets to find the best jurisdiction. Recently we have made the global overview of the VASP regulation in EEA and ready to share information with our future and existing clients. Today we will look at the features of obtaining a cryptocurrency license in Finland.

Tax Summary:

  1. Personal income tax – 12,64-44%
  2. Corporate income tax – 20%

What law/s governs VASP activities?

  1. Laki virtuaalivaluutan tarjoajista (“LVT“)
  2. Regulations and guidelines 4/2019: Virtual currency providers

What activities are included in VASP services?

According to 2 § of the LVT:

  1. A virtual currency provider (“VCP“) means a virtual currency issuer, a virtual currency exchange service and a wallet service provider.
  2. A virtual currency issuer is a natural or legal person who issues a virtual currency.
  3. A virtual currency exchange service, practiced by a natural or legal person as a business or professional activity, is:
    • The exchange of a virtual currency into legal tender or another virtual currency as a service.
    • The exchange of a virtual currency into another commodity or the exchange of another commodity into a virtual currency as a service.
    • The operation of a marketplace where a provider’s customers may engage in the activities referred to in points (a) and (b) above.
  4. A wallet provider is a natural or legal person who holds virtual currency for the account of some other party or provides for the transfer or storage of virtual currency.
  5. Virtual currency service means the issuance of virtual currency, the exchange of virtual currency, and the provision of a wallet service.

Who is the VASP regulator?

  1. Financial Supervisory Authority (“FIN-FSA“)

What is the procedure for registering a VASP for a local company?

According to 6 § of the LVT:

The FIN-FSA shall register the notifier as a VCP if:

  1. The applicant is entitled to carry on business in Finland.
  2. The notifier is not bankrupt and, if he is a natural person, he is of full age, has no restrictions on his capacity to act, and has not been appointed a guardian.
  3. The notifier is reliable. The criteria of reliability, and compliance which is necessary for registration, are specified in 7 § of the LVT.

§ 2 of the Act on Business Activities states that business activities may be conducted:

  • A natural person resident in the EEA.
  • A Finnish corporation or foundation.
  • A foreign corporation or foundation established under the law of a state belonging to the EEA and having its registered office, central administration or principal place of business in a state belonging to the EEA.

Requirements for a VCP:

  1. Having a company registered in Finland (LLC).
  2. Detailed business plan.
  3. Assessment of fitness and propriety of the applicant.
  4. Corporate legal documents.
  5. Authorization to practice a trade in Finland.
  6. AML/KYC documents.
  7. 2 500 EUR of share capital for an LLC.

Registration form for VCP.

The registration application must include:

  1. A description of the services to be provided.
  2. The name, identifying and location information of the person submitting the application.
  3. Proof of the right to practice a trade, such as an extract from the Trade Register, the Register of Associations to the Register of Foundations.
  4. An extract from the Register of Bankruptcies and Reorganisations, issued by the Legal Register Centre.
  5. If the person submitting the application is a natural person, an extract from the Guardianship Register.
  6. An extract from the Business Prohibition Register issued by the Legal Register Centre.
  7. The applicant’s report on fitness and propriety, and if the person submitting the application is a legal person, a report of the fitness and propriety of the company’s management (fit & proper form VC (fi) (sv) (en)).
  8. A statement on the holding and protection of client money (including e.g. risk assessment).
  9. Information on the marketing of services to be provided to customers (such as terms and conditions of agreement).
  10. Information on customer identification and customer due diligence procedures, risk management systems and the prevention of money laundering and terrorism financing, including e.g..
  11. A risk assessment of money laundering and terrorist financing.
  12. Operating guidelines regarding customer due diligence procedures and obtaining customer information, ongoing monitoring and the obligation to obtain information as well as compliance with the reporting obligation.
  13. A description of how responsibilities have been assigned in the applicant’s organization for duties relating to preventing money laundering and terrorist financing.
  14. A description of the training and protection of employees.

The FIN-FSA will obtain extracts required for registration from the Register of Crimes and Sanctions as well as Compliance Reports. 

The registration application together with statements attached to it must be submitted either in Finnish or Swedish. Submission of documents written in another language must be agreed with FIN-FSA in advance.

Is there any specific authorization required for a VASP from another EU member state to provide services in this jurisdiction?

4 § LVT establishes the following – a trader may only offer virtual currency services if it is registered as a VCP under the LVT.

What is the liability for the activities of a VASP from another EU member state without local registration/authorization in this jurisdiction?

15 § LVT states that:

The FIN-FSA shall prohibit the provision of virtual currency services that is carried out without registration in violation of the LVT. The prohibition may, where there are specific grounds for doing so, also be imposed on a person employed by or acting on behalf of a person engaging in such activities.

The prohibition shall be reinforced by a penalty payment, unless this is unnecessary for a special reason. The right of the FIN-FSA to impose a public warning is laid down in the Act on the Financial Supervisory Authority.

Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.