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Finland begins regulation of crypto currency sector

From the beginning of May, only crypto firms which have registered will be able to operate legally in Finland.

Bitcoin ja Ethereum virtuaalivaluutta.
Crypto currencies Bitcoin and Ethereum. Image: AOP

Finland's Financial Supervisory Authority (FIN-FSA) officially began regulating the crypto currency sector on 1 May.

According to law, the authority is now charged with the oversight of all crypto-exchanges, crypto deposit providers and cryptocurrency issuers that operate in the country.

From the beginning of the month, all crypto currency-based firms operating in Finland are required to register with FIN-FSA.

The Finnish legislation was based on the fifth EU Directive on fighting money laundering, according to the financial regulator, which went into force last summer.

In a press release the authority said registration will ensure that crypto-based firms will comply with laws related to a firm's reliability, the holding and protection of client funds, the segregation of a company's money and that of clients, the marketing of services and compliance with Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations.

"It has been internationally acknowledged that virtual currencies and related services involve a high risk of money laundering and terrorist financing," the agency said.

New investor protections not included

Now, only registered crypto firms will be able to operate legally in Finland.

"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 authority said.

Investments in crypto currencies are widely known to be risky. But the authority said its new regulatory role in the crypto sector does not mean it will offer new protections for investors.

"Virtual currencies have particularly gained attention as investment objects. In spite of the upcoming supervision and registration, the characteristics of virtual currencies and the risks related to virtual currency investments remain unchanged. 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," the authority said.

FIN-FSA is planning to hold a briefing for crypto firms on 15 May at 1:00pm at the Bank of Finland in Helsinki. Among other matters, the briefing will include information on the authority's position on when crypto currency providers need to register, the required steps of registration and will also shed light on the requirements that crypto firms will need to fulfill.

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