Finland has taken a major step toward regulating the cryptocurrency industry. The country’s president has approved the Act on Virtual Currency Providers, which will come into force on May 1, 2019. The law mandates that all cryptocurrency service providers—including exchanges, custodian wallet providers, and issuers of virtual currencies—must register with the Financial Supervisory Authority of Finland (FIN-FSA) and comply with statutory requirements. Non-compliant providers will be prohibited from operating and may face conditional fines.
Scope of Regulation and Registration Conditions
FIN-FSA will act as both the registration authority and supervisory body for virtual currency providers. The law covers three categories: virtual currency exchange services, custodian wallet providers, and issuers of virtual currencies. To obtain registration, providers must demonstrate reliability, ensure the ability to hold and protect client money, and strictly segregate client funds from their own operational funds. Additionally, they must comply with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations. The Finnish watchdog stated: “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.”
Transitional Provisions
Recognizing the need for a smooth transition, the law includes a transitional provision that allows existing crypto service providers to continue operating in Finland without registration until November 1, 2019. However, they must complete the registration process before that date to avoid enforcement actions. To assist industry participants, FIN-FSA will hold a briefing on May 15, 2019 at the Bank of Finland, aimed at both existing providers and those planning to enter the market.
Alignment with EU Legislation
The new Finnish law is based on the May 2018 amendments to the EU Anti-Money Laundering Directive (the Fifth Money Laundering Directive, 5AMLD). According to the directive, all EU member states are required to bring virtual currency services under AML/CFT legislation by January 10, 2020. Consequently, Finland’s move aligns with the broader European regulatory framework. Importantly, registration with FIN-FSA does not automatically grant a license to operate in other EU countries; each member state maintains its own registration regime, which must be satisfied separately.
Industry Response
Localbitcoins, the Helsinki-based P2P crypto marketplace, has already begun adapting. The company announced a new account registration process that allows users to verify basic information during sign-up, preparing for the enhanced compliance requirements. This proactive step signals that the Finnish crypto industry is embracing regulatory clarity.
With the enforcement date set for May 1, 2019, Finland becomes one of the early EU member states to implement 5AMLD requirements for virtual currency providers. The regulation is expected to foster a more transparent and trustworthy environment for crypto services in the country, while also setting a precedent for other European jurisdictions.