Since the inception of Bitcoin, cryptocurrencies have posed a major challenge to the traditional financial institutions and governments. The rise of scams associated with initial coin offerings led to China and several other states imposing strict laws against engaging in cryptocurrencies.
The latest government to regulate crypto activities is Finland. The country’s president approved a law aimed at regulating cryptocurrency service providers. The new law targets issuers of cryptocurrencies, custodian wallet providers, and crypto exchanges. According to official statements, the law will come into effect next week. All crypto service providers must now register with Finland’s Financial Supervisory Authority (Fin-FSA) and meet all statutory requirements.
Finland’s Ministry of Finance said on April 26 that the president approved the Act on Virtual Currency Providers. The Fin-FSA is responsible for regulating the country’s financial markets. The Authority expects the new law to enter into force on May 1. According to the act, Fin-FSA will act entirely as the registration authority for digital currency providers.
All cryptocurrency exchanges, issuers of digital assets, and custodian wallet providers are affected by the new law. All these service providers must conform and comply with the set statutory requirements. For instance, they should have the capacity to keep and protect client money. Moreover, they should separate client money from their funds and comply with CFT and AML regulations.
Fin-FSA said that only those providers who meet all statutory requirements will have permission to operate in Finland. Any currency providers that do not comply with the new law are liable to pay a conditional fine.
Nonetheless, the law has a transitional provision that lets existing service providers continue with their operations in Finland without registration until November 1, 2019. The Fin-FSA is scheduled to hold a meeting on May 15 at the Bank of Finland.
During the meeting, the regulating authority will expound on the new rules, Existing crypto service providers and those seeking to join the industry are expected to attend.
Complying with the European Union’s Legislation
The Fin-FSA announced that the new requirements are primarily based on the May 2018 amendments to the EU Anti-Money Laundering Directive. That is the Fifth Money Laundering Directive which requires all European Union members to include services related to digital assets within the AML/CFT legislation scope by January 10, 2020.
Moreover, registration with the Fin-FSA restricts the service providers to operate in Finland. According to the law, any crypto service providers registered in the country must never operate in any other EU country since every member state has its unique laws.
Before the president approved this law, Helsinki-based crypto marketplace Localbitcoins said that it was working on improvement measures. These measures would enable the marketplace to conform to the new regulation set by the government. The company launched a new account registration strategy letting users verify their basic data and information during sign-up.