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Retail_Trading_Status

Allowed-Regulated Unknown
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Analysis ID
#101
Version
Archived
Created
2025-04-12 06:45
Workflow Stage
Live

Executive Summary

Retail trading of cryptocurrencies is permitted but regulated in Finland, with the Finnish Financial Supervisory Authority (FIN-FSA) overseeing service providers. Initially, the Act on Virtual Currency Providers (572/2019) focused on AML/CFT compliance for registered VASPs. Now, Finland is transitioning to the EU's Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114, requiring CASPs to obtain new authorizations by June 30, 2025. This shift introduces more comprehensive licensing and regulatory oversight.

Key Pillars

  • Primary Regulator: The Finnish Financial Supervisory Authority (FIN-FSA) supervises VASPs and CASPs.
  • Core Compliance Requirements: AML/CFT obligations, including customer due diligence (KYC) procedures, ongoing monitoring of transactions, risk assessment, and reporting suspicious activities.
  • Licensing/Registration: Initially, registration was required under the Act on Virtual Currency Providers; now, authorization is required under MiCA for CASPs.

Landmark Laws

  • Act on Virtual Currency Providers (572/2019): Came into force in May 2019, requiring VASPs to register with the FIN-FSA and comply with AML/CFT obligations.
  • Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114: Became fully applicable on December 30, 2024, introducing a harmonized licensing regime for CASPs across the EU.
  • Act on Crypto-Asset Service Providers and Markets in Crypto-Assets (402/2024): Finland's national legislation implementing MiCA, repealing the previous Act on Virtual Currency Providers.

Considerations

  • Crypto-assets are defined as a digital form of value not issued by a central bank or legal tender but can be used as a means of payment and exchanged electronically (pre-MiCA).
  • The FIN-FSA emphasizes the risks associated with crypto-assets, including high volatility, scams, and security threats.
  • Existing VASPs registered under the old Finnish law must apply for and obtain a new, more stringent MiCA authorization from the FIN-FSA to continue operating after a transitional period ending June 30, 2025.

Notes

  • The FIN-FSA maintains a public register of supervised VASPs and CASPs.
  • The FIN-FSA issued a supervision release and warnings about the risks associated with crypto-assets, including volatility, scams, and security threats. The European Supervisory Authorities also issued warnings in 2022 and 2024.
  • Existing VASPs must obtain MiCA authorization by June 30, 2025, to continue operating legally.
  • The FIN-FSA has received applications for authorization under MiCA from eight companies and is currently processing them.

Detailed Explanation

Retail trading of cryptocurrencies is permitted in Finland but regulated, primarily focusing on the service providers facilitating these transactions. Finland has implemented the EU's Fifth Anti-Money Laundering Directive (AMLD5) through the Act on Virtual Currency Providers (572/2019), which came into force in May 2019. This act required virtual asset service providers (VASPs) like exchanges and custodian wallet providers to register with the Finnish Financial Supervisory Authority (FIN-FSA) and comply with AML/CFT obligations, including KYC procedures and suspicious activity reporting. The FIN-FSA supervises these registered VASPs and issues warnings about the risks associated with crypto-assets, emphasizing their volatility and potential for illicit use. The definition of a crypto-asset, according to the VASP Act of Finland, is a digital form of value that is not issued by a central bank or other authority and is not legal tender, but individuals can use as a means of payment and can be transferred, stored and exchanged electronically.

The regulatory landscape is evolving due to the EU's Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114, which became fully applicable on December 30, 2024. Finland has implemented MiCA through the Act on Crypto-Asset Service Providers and Markets in Crypto-Assets, 402/2024, repealing the previous Act on Virtual Currency Providers. Existing VASPs must obtain a new MiCA authorization from the FIN-FSA to continue operating after June 30, 2025. This transition involves a more comprehensive licensing regime for Crypto-Asset Service Providers (CASPs) and covers consumer protection, market integrity, operational resilience, and capital requirements, in addition to AML/CFT. The FIN-FSA has received applications for authorization under MiCA from eight companies, which are currently being processed.

The FIN-FSA's April 3, 2025, press release highlights the tightening regulations due to MiCA and emphasizes the need for consumers to remain cautious about the risks associated with crypto-assets. The European Supervisory Authorities also issued warnings about crypto-asset risks in 2022 and 2024. The implementation of MiCA in Finland signifies a move towards a more robust and harmonized regulatory framework for crypto-assets within the EU. Prifinance Company states that cryptocurrency transactions are legal in Finland, and entities operating in this sector must adhere to clear legal criteria, emphasizing the importance of obtaining a Finland crypto license for safe and legal work. Nordic Law notes that VASPs are under the supervision of the FIN-FSA and must submit a registration notification.

Summary Points

Retail Cryptocurrency Trading in Finland: Regulatory Overview

1. General Status:

  • Allowed-Regulated: Individuals in Finland can legally buy, sell, and hold cryptocurrencies.
  • Regulation primarily focuses on service providers (exchanges, custodians) rather than directly restricting individual activity.

2. Key Regulatory Bodies:

  • Finnish Financial Supervisory Authority (FIN-FSA):
    • Supervises Virtual Asset Service Providers (VASPs) and Crypto-Asset Service Providers (CASPs).
    • Maintains a public register of VASPs (pre-MiCA) and authorizes CASPs (post-MiCA).
    • Issues warnings about the risks associated with crypto-assets.
  • Financial Intelligence Unit: Receives reports of suspicious transactions from VASPs/CASPs.

3. Important Legislation and Regulations:

  • Pre-MiCA:
    • Act on Virtual Currency Providers (572/2019): Implemented EU's AMLD5. Required VASPs to register with FIN-FSA.
    • Finnish AML Act: Requires registered virtual currency providers to comply with AML/CFT obligations.
  • Post-MiCA:
    • Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114: EU-wide regulation introducing a harmonized licensing regime for CASPs.
    • Act on Crypto-Asset Service Providers and Markets in Crypto-Assets (402/2024): Finnish legislation implementing MiCA, repealing the Act on Virtual Currency Providers.

4. Requirements for Compliance (Service Providers):

  • Pre-MiCA (VASPs):
    • Registration with FIN-FSA.
    • Right to conduct business in Finland (establishment or branch).
    • Robust Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) compliance:
      • Customer Due Diligence (KYC) procedures.
      • Ongoing transaction monitoring.
      • Risk assessment.
      • Reporting suspicious activities.
    • Reliability of provider and management.
    • Adequate procedures for safeguarding customer funds and assets.
    • Clear and non-misleading information in marketing.
  • Post-MiCA (CASPs):
    • Authorization from FIN-FSA under MiCA (more stringent than VASP registration).
    • Compliance with MiCA requirements covering:
      • Consumer protection.
      • Market integrity.
      • Operational resilience.
      • Capital requirements.
      • AML/CFT.

5. Notable Restrictions or Limitations:

  • Individuals typically must trade through regulated VASPs/CASPs, subjecting them to KYC/AML checks.
  • FIN-FSA emphasizes the risks associated with crypto-assets (volatility, lack of legal tender status, potential for illicit use).

6. Recent Developments and Changes:

  • Full application of MiCA Regulation (December 30, 2024): Tightened regulation of crypto-asset services and harmonized the market across the EU.
  • Implementation of MiCA in Finland (Act 402/2024): Repealed the previous Act on Virtual Currency Providers.
  • Transition Period for Existing VASPs:
    • Existing VASPs registered under the old Finnish law must obtain MiCA authorization to continue operating.
    • Deadline: June 30, 2025. After this date, only MiCA-authorized CASPs (or those operating under transitional provisions) can legally offer services in Finland.
  • FIN-FSA is processing authorization applications from companies seeking to provide crypto-asset services under MiCA.

Full Analysis Report

Report on the Current Status of Retail Cryptocurrency Trading in Finland

Topic: Retail_Trading_Status

Description: Assessment of whether individual citizens and residents in Finland are legally permitted to buy, sell, and hold cryptocurrencies, detailing the regulatory environment surrounding this activity.

1. Current Status: Allowed-Regulated

2. Narrative Explanation:

Retail trading of cryptocurrencies (referred to as virtual currencies or crypto-assets in Finnish regulation) is permitted for individuals in Finland. Citizens and residents can legally buy, sell, and hold these assets. However, the environment is regulated, primarily focusing on the service providers facilitating these transactions, rather than directly restricting individual ownership or trading activities.

Finland implemented the EU's Fifth Anti-Money Laundering Directive (AMLD5) through national legislation, notably the Act on Virtual Currency Providers (572/2019), which came into force in May 2019. This act established a regulatory framework requiring entities providing services related to virtual currencies – such as exchanges, custodian wallet providers, and issuers – to register with the Finnish Financial Supervisory Authority (FIN-FSA). These registered entities are known as Virtual Asset Service Providers (VASPs).

The registration process mandates that VASPs comply with specific requirements, including:
* Having the right to conduct business in Finland (often requiring establishment in Finland or being a Finnish branch of a foreign entity).
* Adhering to robust Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) obligations. This includes implementing customer due diligence (KYC - Know Your Customer) procedures, ongoing monitoring of transactions, risk assessment, and reporting suspicious activities to the Financial Intelligence Unit.
* Ensuring the reliability of the provider and management.
* Implementing adequate procedures for safeguarding customer funds and assets.
* Providing clear and non-misleading information when marketing services.

While individuals are free to trade, they typically must do so through these regulated VASPs, which means they will be subject to KYC/AML checks. The FIN-FSA supervises these registered VASPs and maintains a public register. It also issues warnings about the risks associated with crypto-assets, emphasizing their volatility, lack of legal tender status, and potential for use in illicit activities or scams.

The regulatory landscape is currently evolving significantly due to the EU's Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114. MiCA introduces a harmonized and more comprehensive licensing regime for Crypto-Asset Service Providers (CASPs) across the EU, going beyond the previous AML-focused registration. MiCA became fully applicable on December 30, 2024. Finland has implemented MiCA through national legislation (Act on Crypto-Asset Service Providers and Markets in Crypto-Assets, 402/2024), which repealed the previous Act on Virtual Currency Providers.

Existing VASPs registered under the old Finnish law must apply for and obtain a new, more stringent MiCA authorization from the FIN-FSA to continue operating after a transitional period. Finland has opted for a relatively short transitional period, ending June 30, 2025 (though some sources mention Dec 30, 2025, the April 2025 FIN-FSA press release confirms the June 30th deadline for existing registered VASPs). After this date, only MiCA-authorized CASPs (or those operating under transitional provisions) can legally offer services in Finland. This shift signifies a move towards a more robust regulatory framework covering aspects like consumer protection, market integrity, operational resilience, and capital requirements, in addition to AML/CFT.

In summary, individuals in Finland can legally trade crypto-assets, but the platforms and service providers they use are subject to increasingly stringent regulation and supervision by the FIN-FSA, initially under the Act on Virtual Currency Providers (VASP registration focused on AML) and now transitioning to the comprehensive MiCA framework (CASP authorization).

3. Supporting Excerpts:

  • On Legality and Regulation of Providers (Pre-MiCA): "Cryptocurrency transactions, including purchasing, selling, and using digital assets, are legal in Finland. It is also essential that entities operating in this niche must adhere to clear legal criteria... The government has taken measures to regulate cryptocurrency services. The Virtual Currency Providers Act was enacted on May 1, 2019. This emphasizes the importance of obtaining a Finland crypto license for safe and legal work in this sector." (Source: Prifinance Company)
  • On VASP Registration & Supervision: "VASPs in Finland are under the supervision of the Financial Supervisory Authority (FIN-FSA), and whoever intends to offer services relating to virtual currencies must thus submit a registration notification to the FIN-FSA for entry into the register." (Source: Nordic Law)
  • On AML/KYC Requirements: "Registered virtual currency providers must comply with all the obligations under the Finnish AML Act. This includes preparing a risk assessment on money laundering and terrorist financing, conducting customer due diligence and ongoing monitoring, as well as reporting suspicious transactions to the Financial Intelligence Unit..." (Source: Hannes Snellman / Thomson Reuters)
  • On MiCA Implementation: "The full application of the EU Regulation on Markets in Crypto-Assets (MiCA) has begun, tightening regulation of crypto-asset services and harmonising the market... The EU Regulation on Markets in Crypto-Assets became fully applicable on 30 December 2024. The Regulation requires crypto-asset service providers to comply for the first time with many of the requirements established in financial markets..." (Source: STT Info / FIN-FSA Press Release, April 3, 2025)
  • On Transition to MiCA Authorization: "If registered virtual currency providers wish to continue their activities after 30 June [2025], they must obtain authorisation of a crypto-asset service provider under MiCA. The FIN-FSA has received applications for authorisation under MiCA to provide crypto-asset services from eight companies. These applications are currently being processed." (Source: STT Info / FIN-FSA Press Release, April 3, 2025)
  • On FIN-FSA Warnings: "The European Supervisory Authorities have issued a warning about the risks of crypto-assets in 2022 and another one in 2024, at the outset of the application of the MiCA Regulation... The FIN-FSA has issued a supervision release in the context of the matter... The risks associated with crypto-assets, such as high volatility, scams and security threats, remain significant." (Source: FIN-FSA website & STT Info / FIN-FSA Press Release, April 3, 2025)
  • On Crypto-asset Definition (Pre-MiCA): "According to the VASP Act of Finland, a crypto-asset is a digital form of value that: has not been issued by a central bank or other authority and is not legal tender; individuals can use as a means of payment; and can be transferred, stored and exchanged electronically." (Source: Chambers and Partners)

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