Has Finland Successfully Legalized Crypto?

Date:

Written by Nezwan Helmy

In 2019, a statement by Finland’s Finance Ministry, issued by its President, stated that all businesses engaged with crypto and “the exchange of virtual currency” would need to register with the country’s Financial Supervisory Authority (FSA).

According to the law, the authority is now in charge of overseeing all cryptocurrency exchanges, deposit providers, and issuers which operate in the nation.

These businesses will be required to show their legitimacy in order to acquire a specific licence, and as such, they must be able to handle user accounts effectively, maintain separate financial records for their clients and business, and comply with anti-money laundering and counter-terrorist financing legislation. Furthermore, they will also need to show their competency in managing customer’s money by providing appropriate security measures.

In accordance with the new regulation, any firm that does not comply with these criteria will be banned from doing business in the cryptocurrency field and will be subject to a monetary penalty.

Tracing Back Its History

The legislation of crypto in Finland started when the European Union’s Money Laundering Directive was amended in mid 2018. This new amendment required all EU members to include cryptocurrency services within their Anti-Money Laundering national standards by January 2020.

Before this, a large number of cryptocurrencies were being traded illegally, where it was difficult to determine the source of the transaction. In addition to being a challenge on both the logistics and intelligence sides of the Finnish government, the situation also favoured individuals who were engaged in criminal activities such as money laundering and terrorism financing.

With the mandate of the new amendment, all cryptocurrency service providers must be registered with the relevant domestic agencies. 

The Good Sides

As a consequence of these modifications, more mainstream companies in Finland will be able to utilise crypto coins and digital tokens, thus increasing the market for cryptocurrency. As a result, European businesses will be able to compete with Asian markets that have already integrated cryptocurrencies into their legal structure, guaranteeing more widespread and monitored use.

Another important consequence of these steps establishing cryptocurrencies as a legal mode of payment, is that they will contribute to the creation of an atmosphere in which everyone has a certain degree of confidence in the use of digital payments.

In some respects, it will be similar to the shift from cash to credit cards. All of these measures will aid the expansion of cryptocurrency’s client base, which is essential for the currency’s long-term viability.

Even before the Finnish President approved the decree, cryptocurrencies such as Bitcoin had been observed as they gained the interest of the Finnish citizens and as virtual currencies gained particular attention as investment objects. 

Despite now being supervised by the government, the characteristics of cryptocurrencies and the risks related to virtual currency investments remain unchanged. 

The risks include: major, sudden fluctuations in value, data security threats pertaining to crypto exchange services and wallet providers, and simply the nature of several crypto coins and tokens being speculative investments.

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