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Åland Islands

Retail_Trading_Status

Allowed-Regulated Unknown
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Analysis ID
#57
Version
Archived
Created
2025-04-12 06:41
Workflow Stage
Live

Executive Summary

Retail cryptocurrency trading is allowed and regulated in the Åland Islands, aligning with Finnish regulations under the supervision of the Finnish Financial Supervisory Authority (FIN-FSA). Key requirements include AML/KYC compliance, registration or authorization for intermediaries, and adherence to the Act on Virtual Currency Providers and the EU's MiCA Regulation. There are transitional periods for existing providers to comply with MiCA, ending on June 30, 2025, and the FIN-FSA actively warns consumers about the risks associated with crypto-assets.

Key Pillars

The primary regulator is the Finnish Financial Supervisory Authority (FIN-FSA), which oversees crypto-asset activities in Åland under Finnish law and the EU's MiCA framework. Core compliance requirements include stringent Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations, including Know Your Customer (KYC) requirements and customer due diligence, as mandated by the Finnish AML Act (444/2017). Service providers must be registered or authorized with the FIN-FSA, with a transition from the national registration system to MiCA authorization by June 30, 2025.

Landmark Laws

  1. Act on Virtual Currency Providers (572/2019): Enacted on May 1, 2019, mandating registration with the FIN-FSA for entities providing crypto services and subjecting them to AML/CFT regulations.
  2. Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114: Key aspects began applying in June 2024, with full effect on December 30, 2024, establishing a harmonized EU framework for crypto-asset issuers and Crypto-Asset Service Providers (CASPs), requiring authorization from the FIN-FSA.
  3. Anti-Money Laundering Act (AML Act, 444/2017): Mandates stringent customer due diligence and AML/CFT compliance for registered virtual currency providers.

Considerations

Crypto assets are subject to capital gains tax under Finnish state taxation laws, which also apply in Åland. The FIN-FSA actively warns consumers about the high risks associated with crypto-assets, emphasizing that MiCA does not eliminate risks like fraud or market volatility, nor does it guarantee product suitability assessments or provide investor compensation fund coverage. Maria Rekola, Head of Division at the FIN-FSA, noted that a large share of contacts they receive about crypto-assets involve fraud, and consumer protections may not apply to services purchased outside the EU or EEA.

Notes

The Åland Islands operate under a unique legal framework defined by the Act on the Autonomy of Åland. While Åland has legislative competence in areas like education and health, financial market regulation falls under Finnish state law. The transition period for Virtual Currency Providers to comply with MiCA ends on June 30, 2025, or when authorization is refused. Source URLs provided point to search result summaries, indicating that original source access might be limited.

Detailed Explanation

The Åland Islands, an autonomous region of Finland, are subject to Finnish state law regarding financial market regulation, including oversight of cryptocurrencies, as specified in the Act on the Autonomy of Åland. The Finnish Financial Supervisory Authority (FIN-FSA) supervises cryptocurrency activities. Individuals in Åland can legally buy, sell, and hold cryptocurrencies, similar to mainland Finland. This is permitted within a regulated environment that has been significantly shaped by the Act on Virtual Currency Providers (572/2019), effective since 2019, mandating registration with the FIN-FSA for crypto exchanges, custodian wallets, and crypto issuers. These providers must adhere to Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations, including Know Your Customer (KYC) requirements, customer due diligence, ongoing monitoring, and reporting obligations, as detailed in the Anti-Money Laundering Act (AML Act, 444/2017). The landscape is evolving with the implementation of the EU's Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114, which introduces a harmonized framework for crypto-asset issuers and Crypto-Asset Service Providers (CASPs) across the EU. Key aspects of MiCA took effect in June 2024 (for asset-referenced and e-money tokens), with full implementation on December 30, 2024. Under MiCA, CASPs operating in Finland and Åland require authorization from the FIN-FSA, superseding the previous national registration system. A transitional period allows previously registered Virtual Currency Providers to operate while seeking MiCA authorization, provided they applied by October 30, 2024; this transition ends on June 30, 2025, or when authorization is refused. Retail investors must use authorized CASPs that adhere to MiCA's AML/KYC procedures. The FIN-FSA warns consumers about crypto-asset risks, noting that MiCA does not eliminate risks like fraud or market volatility, nor does it guarantee product suitability assessments or investor compensation. Crypto gains are subject to capital gains tax under Finnish state taxation laws, which apply in Åland. Maria Rekola, Head of Division at the FIN-FSA, emphasized that a significant portion of contacts they receive about crypto-assets involve fraud, and consumer protections may not apply to services purchased outside the EU or EEA.

Summary Points

**Retail Cryptocurrency Trading Status in Åland Islands**
(As of April 12, 2025)

**I. Overall Regulatory Status:**

*   **Allowed-Regulated:** Retail cryptocurrency trading is legal in Åland Islands but operates under a regulated framework.

**II. Key Regulatory Bodies and Their Roles:**

*   **Finnish Financial Supervisory Authority (FIN-FSA):**
    *   Supervises financial markets, including cryptocurrency activities, in Finland and Åland Islands.
    *   Acts as the registration and authorization authority for Crypto-Asset Service Providers (CASPs).
    *   Enforces Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations.
    *   Issues warnings to consumers about the risks associated with crypto-assets.
*   **European Union (EU):**
    *   Through the Markets in Crypto-Assets (MiCA) Regulation, sets the harmonized regulatory framework for crypto-assets across the EU, including Finland and Åland.

**III. Important Legislation and Regulations:**

*   **Act on the Autonomy of Åland:** Defines the unique legal framework of Åland Islands, where Finnish state law applies in areas like financial market regulation.
*   **Finnish Act on Virtual Currency Providers (572/2019):** (Pre-MiCA) Mandated registration with the FIN-FSA for crypto service providers.
*   **EU's Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114:**
    *   Establishes a harmonized framework for crypto-asset issuers and Crypto-Asset Service Providers (CASPs) across the EU.
    *   Covers issuance, offering, trading, and provision of crypto-asset services.
    *   Requires CASPs to obtain authorization from the FIN-FSA.
*   **Finnish Anti-Money Laundering Act (AML Act, 444/2017):** Mandates stringent customer due diligence.

**IV. Requirements for Compliance:**

*   **For Crypto-Asset Service Providers (CASPs):**
    *   **Authorization:** Must obtain authorization from the FIN-FSA under MiCA.
    *   **AML/CFT Compliance:** Implement robust AML/CFT measures, including:
        *   Risk assessments for money laundering and terrorist financing.
        *   Know Your Customer (KYC) procedures.
        *   Customer due diligence.
        *   Ongoing monitoring of transactions.
        *   Reporting of suspicious transactions.
    *   **Operational Requirements:** Adhere to operational requirements as defined by MiCA.
*   **For Retail Investors:**
    *   Typically must trade through authorized CASPs (Finnish-authorized or passporting from other EU states).
    *   Comply with KYC procedures of the CASPs.
    *   Be aware of the high risks associated with crypto-assets.
    *   Pay capital gains tax on crypto gains under Finnish state taxation laws.

**V. Notable Restrictions or Limitations:**

*   **Risk Warnings:** The FIN-FSA actively warns consumers about the high risks associated with crypto-assets, including fraud and market volatility.
*   **Limited Consumer Protection:** MiCA does not eliminate all risks, nor does it guarantee product suitability assessments or provide investor compensation fund coverage.
*   **Taxation:** Crypto gains are subject to capital gains tax under Finnish state taxation laws.

**VI. Recent Developments or Changes:**

*   **MiCA Implementation:** The EU's Markets in Crypto-Assets (MiCA) Regulation is being implemented in Finland, impacting the regulatory landscape for crypto-assets.
    *   Key aspects of MiCA began applying in June 2024 (for asset-referenced and e-money tokens).
    *   Full regulation took effect on December 30, 2024.
*   **Transitional Period:** Finland established a transitional period for previously registered Virtual Currency Providers to apply for MiCA authorization.
    *   The transition ends on June 30, 2025, or when authorization is refused.

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Åland Islands

Date: April 12, 2025

Area of Assessment: Retail_Trading_Status
Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

1. Current Status: Allowed-Regulated

2. Detailed Narrative Explanation:

The Åland Islands, an autonomous region of Finland, operates under a unique legal framework defined by the Act on the Autonomy of Åland. While Åland possesses legislative competence in numerous areas (e.g., education, health, environment, local policing), key areas such as foreign affairs, most civil and criminal law, the court system, customs, and state taxation remain under the jurisdiction of the Republic of Finland [19, 22]. Crucially, financial market regulation, including the oversight of cryptocurrencies and related services, falls under Finnish state law and is supervised by the Finnish Financial Supervisory Authority (FIN-FSA) [5, 8, 13]. Therefore, the status of retail cryptocurrency trading in the Åland Islands is identical to that in mainland Finland.

In Finland, the buying, selling, holding, and general use of cryptocurrencies by individuals is legal [4, 6, 16]. However, this activity operates within a regulated environment. Finland was proactive in regulating the sector, implementing the Act on Virtual Currency Providers (572/2019) in 2019, which mandated registration with the FIN-FSA for entities providing services like crypto exchanges, custodian wallets, and crypto issuance [4, 5, 6]. These providers were, and continue to be, subject to strict Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations, including robust Know Your Customer (KYC) requirements, customer due diligence, ongoing monitoring, and reporting obligations [4, 5, 7, 13, 17].

The regulatory landscape is currently evolving due to the implementation of the European Union's Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114 [3, 10, 11, 17]. MiCA establishes a harmonized framework across the EU for crypto-asset issuers and Crypto-Asset Service Providers (CASPs). Key aspects of MiCA began applying in June 2024 (for asset-referenced and e-money tokens), with the full regulation taking effect on December 30, 2024 [11, 17]. Under MiCA, CASPs operating in Finland (and thus Åland) require authorization from the FIN-FSA, replacing the previous national registration system [8, 10, 17]. Finland has established a transitional period for previously registered Virtual Currency Providers, allowing them to continue operating while seeking MiCA authorization, provided they applied by October 30, 2024; this transition ends on June 30, 2025, or when authorization is refused [10, 17].

Retail investors in Åland are permitted to trade cryptocurrencies but must typically do so through authorized CASPs (either Finnish-authorized or those passporting services from other EU states) that adhere to MiCA's requirements, including AML/KYC procedures [5, 10, 17]. The FIN-FSA actively warns consumers about the high risks associated with crypto-assets, emphasizing that MiCA does not eliminate risks like fraud or market volatility, nor does it guarantee product suitability assessments or provide investor compensation fund coverage [3, 10]. Crypto gains are subject to capital gains tax under Finnish state taxation laws, which apply in Åland [6, 13, 19].

In summary, individuals in the Åland Islands can legally engage in cryptocurrency trading, but the ecosystem is regulated under Finnish law (supervised by FIN-FSA) which now incorporates the EU's MiCA framework, imposing authorization, AML/KYC, and operational requirements on service providers.

3. Relevant Text Excerpts:

  • On Åland's Legislative Competence: "Finnish state law applies in the areas in which the Åland Parliament does not have legislative powers: foreign affairs; most areas of civil and criminal law; the court system; customs; state taxation." [19]
  • On Legality in Finland: "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." [6]
  • On Finnish Regulation (Pre-MiCA): "The Finnish Financial Supervisory Authority (the FIN-FSA) acts as the registration authority and supervisory authority for crypto-assets and related services under the Finnish Act on Virtual Currency Providers (572/2019, as amended...)" [5] "Anyone who offers any of the above virtual currency services [issuance, exchange, custody] in Finland must register with the FIN-FSA." [5]
  • 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..." [5] "Finland's AML framework, under the Anti-Money Laundering Act (AML Act, 444/2017), mandates stringent customer due diligence." [17]
  • On MiCA Implementation: "The EU's Markets in Crypto-Assets (MiCA) Regulation has fully entered into force, marking a shift in the oversight of crypto-asset services across the European Union. In Finland, the Financial Supervisory Authority (FIN-FSA) says the changes bring tighter requirements for service providers..." [3] "The Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114 regulates: issuance of crypto-assets; offering of crypto-assets to the public; seeking of admission to trading of crypto-assets; and; provision of crypto-asset services." [10] "Under MiCA, the provision of crypto-asset services is subject to authorisation." [11]
  • On Consumer Risks: "Maria Rekola, Head of Division at the FIN-FSA, said that although MiCA improves regulatory clarity, it does not eliminate core risks. 'A large share of the contacts we receive about crypto-assets involve fraud,' Rekola said. 'MiCA does not require providers to assess whether a product is suitable for the customer, and consumer protections do not apply to services purchased outside the EU or EEA.'" [3]
  • On Retail Applicability: "The Virtual Currency Act applies equally to the offer and provision of virtual currency services to both wholesale and retail clients in Finland." [5] (Note: MiCA similarly applies broadly).

4. Source URLs:

  • [3] Helsinki Times (Reporting FIN-FSA statements on MiCA): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAI0SQT4cG-7LqSH6dxdHI57TC__liGxvX5ksg5UOJvAJwcF4HzsyKtk_LdmLajrAAXlEgVRoZHphI2puwp8GF-D9Bwe1YQSAU-LgB8q3L9NfSgty2hi635qrXXHY94TGFHfbR14LN_DJGdA8x5mQG8jGlJpAplLxlhJkh1X6sj3WNJ-pcZe8RNv0PJGOa5QuQTSOFOR3toad9Gv8CMrmSFVwVofjQ== (Link points to search result summary, original likely at helsinkitimes.fi)
  • [4] Freeman Law (Overview of Finnish Crypto Laws): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJfmQT63l2Sur71cxUe40By_HTcrJQ_rDgQ4mwfEQu1X29526Ev1yIrf6yZzjtENEjKuIiTIX_wgseWtfB1S-hgDDjcsKpOOWQTyL3PPL-Y9CrBO7ekqgyT82TONHookSW1cAeA (Link points to search result summary, original likely at freemanlaw.com)
  • [5] Hannes Snellman via Thomson Reuters (Legal Update on Finnish Crypto Regulation pre-MiCA full effect): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAKC8lw98kbfIoPPMMFrlIoK-gXwoCv8iL7Ne0GKyxwuEsxTM8hlK7GgRmNDm0Z6xMb3_C5GsfQaSyUISVlHScWsjZk-jsUvHElSjsJYZbNGYk0MJD1ADX37JApQz0V-7VRe2v64Xiykn7ny9h7c6Re3CjFvWn61u_zRkJUtjE3T
  • [6] Prifinance Company (Overview of Finnish Crypto Licensing): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJ68AwirlRnWKuxqo-ulBeDKf0EQg0Cg-qwxv1ynB1V7oyqs66CIUJ1QgHo2knvs2Huf6hookVaATM_gSz6oDY-hiiZMQa_N-egi_UajguUP4zkPE_3xBFw3skjMBTXuQmyibAj2QuE3DeqkutyRh8= (Link points to search result summary, original likely at prifinance.com)
  • [7] Ripjar (AML Regulations in Finland): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJKEFDyCtNOlYdkl9RbYqvK6UtF1i19OG2P4rDAoSdOnLEbalar0G7adCkSf1qM6P__QfCm2u-AWmnUJQKn-PvdoRztnhuc713JdtPZ9gM15q_hN6cGGU1hiNLqPq6xRMjoTglfspPwlJOzIU4A6iQblvJWz1KIAgovlRE= (Link points to search result summary, original likely at ripjar.com)
  • [8] Thomson Reuters Practical Law (Finland Financial Services Overview): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAKXPbTFSHPeONzKWof22PpvekZf1ng6DbZJDJQiDkdunFNkewSdfpnAgOKI5BbtN1b8Uudd3_5gZHqAGxKjp4wzmqZK-PG_rDmlFYUJBIPpfmAegDW9h3AgBlUOeE7T_vUKpSa2yYH3Sr8dHjjBl09ftafT2UbYhQ5U-2nNkPRNBukuj9euiCDlR1128I_Wi5ehCjQRq0EAao5ALnO9xm-fa4WxU9Md1ftkKqaa-fc2
  • [10] FIN-FSA (Official page on Crypto-asset activities): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJKZM9wTIhfglgozs-GJGSffWi-lJrSgj_NgdCjTFHparoeUkIAyIyOUYS_GGDRBQbrJKV157RphxiA046ca2eokuTuUnghwfDUDptLDUIY4COnmqOpeBsH7uKOozyC4J36BFlLBwN6-YkHj0JpmBRIKvquH8r9tdwOpvuHWU15vqva896qiFbRJ2o6wF1zLf1LdVC9vndFPifAJ3PCvcI= (Link points to search result summary, original at www.finanssivalvonta.fi)
  • [11] Finnish Ministry of Finance (Legislation overview including MiCA): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqALbc8Ks7-kNysm2wnl4B5HjDxTjo8nu1paKj-AlV8WBsn3jTFKKCgFvBmksZraSVE3-jTutZ7Qd1hG_ud14k59bbZyFGIxmP_RKvU7CRWAZbzZxJm2HvJa38A== (Link points to search result summary, original likely at moneylaundering.fi)
  • [13] Coincub (Overview of Crypto in Finland): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqALzgK5xVPZicA48xZlAaPAJPW06deD6whfs6ih6JvWzy5nE7kXY_UhzfEP7skjWHjurIrhgNivHr76y-HsX1f2_WB59x5DJ51GqQO-A_y2Zm8duWQAIAm3DXPMV1Q== (Link points to search result summary, original likely at coincub.com)
  • [16] SimpleSwap Blog (Legality and Tax in Finland): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJgjhvijyQc0cGKnJ9WiSvm7S2n6dPTxxtatQ6Byf0rhNhknGAit6I9tZyJSoXxF8FX4IyudhLqKezvZyVK1bmJOf59AL1cEjxVJrUIlpHfeRZRQIaA0NLCnEmr0EVjjHSaJg== (Link points to search result summary, original likely at simpleswap.io)
  • [17] Scorechain (Finland MiCA Requirements): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAKinWeUXCaQWxOu8cY3Qka5gGmoW52RFF9FZqHgBqsObPpytUGSdjhDU1sbKpPc68Ko9fLjfhr-EGc88UiC_W1qZ-Wz7RpnYnYpnIvNOqoaJpfuOl7bTAUufX6TdngglKYwUcfnFFQcpbsDNQVW-mP1ChkHszylvYsmrg== (Link points to search result summary, original likely at scorechain.com)
  • [19] Ministry for Foreign Affairs of Finland (Special Status of Åland): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJsVItoplPZ73w32nFAY7f2o3dQjVd2TMejAPni4mhxqWhqxHknmZOABnAzAucVwXNx2r5Kz3kGtd7MkMSuy7Dy7ArHQSNfAtCbtUaFGKm0_2zGxkDTg-RbQiWEoLkkYsQI9twKcp1lrs6wiA== (Link points to search result summary, original likely at um.fi)
  • [22] MarineFinland.fi / Åland Provincial Government (Åland Autonomy Details): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJuAAf65ZCdJFTtVgbhR-c8XD1o38wquivdY7l2MGZ-6pEoVXEhbOPmJNKvhDK4BYL_htMSnZMUf1o5j2M6OzZvx9x365xQiJ64q-Z-YwGw8DPSU9m9bDdB_KVprhcXp0IVI7L50Y54sQGmSnA= (Link points to search result summary, original likely at marinefinland.fi)

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