Finland To Start Regulating Crypto Service Providers

News, Regulation | April 29, 2019 By:

A new law that would regulate cryptocurrency service providers has been approved by Finland’s president Sauli Niinistö.

The new law, called the Act on Virtual Currency Providers, will regulate virtual currency exchange services, custodian wallet providers and issuers of virtual currencies, and will come into effect on May 1. The new law has tasked the Financial Supervisory Authority (FIN-FSA) to act as the registration and supervisory authority for virtual currency providers.

Under the new law, virtual currency providers would be required to comply with FIN-FSA statutory requirements concerning the reliability of the provider, holding and protecting client money, segregation of client money and own funds, marketing of services, and compliance with AML/CFT regulation.

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

The primary objective of the adopted act is to introduce virtual currency providers into the scope of anti-money laundering regulation. The regulator, however, reminded that it will not introduce investor protection to virtual currency services.

“In spite of the upcoming supervision and registration, the characteristics of virtual currencies and the risks related to virtual currency investments remain unchanged,” FIN-FSA said. “The risks include sudden major fluctuations in value, data security threats pertaining to exchange services and custodian wallet providers, and the nature of several virtual currencies as speculative investments not involving any inherent source of return.”