Finance service providers to pass through state channels in Finland
The president of Finland has signed an order about the regulation of the cryptocurrency service providers by the government.
With the latest amendment in the digital currency sector, the Finnish government has passed a law to regulate cryptocurrency in Finland. All Crypto service providers will have to work under FSA (Financial Supervisory Authority) guidelines, after registering with them. Along these lines, they will also have to complete all due verification procedures. With the law being implemented from next week onwards, this brings about huge ramifications in a stream built on anonymity, as the state regulation of cryptocurrency will increase the accountability at each node of digital finance.
Finance Ministry issues guidelines
In its announcement, the Finance Ministry stated that it will be mandatory for all the companies involved with bitcoin and “issuing of virtual currencies”, to register with the FSA.
These organizations will be required to prove their credibility to obtain a license. To do this, they should be able to efficiently manage accounts, maintain separate records for both user and company funds, and comply with AML and CFT laws. They will also need to provide sufficient security and storage apparatus to prove their capabilities in dealing with client funds.
Sources have said that all the companies failing to fulfill these requirements will not be allowed to work and will be subject to a circumstantial fine. There will be a transition period until Nov 1st before which the https://ekronacrypto.com/ service providers will be allowed to work without a license. In a meeting called by the Fin-FSA at the Bank of Finland on May 15th, the body will deliberate on the rules and norms to be followed by pre-existing as well as future crypto service providers.
New Amendment: An extension of the EU directive
This new amendment is in consequence to the May 2018 changes in EU law (Money laundering directive) under which all the members of the EU must incorporate virtual money services under the AML and CFT guidelines of January 2020. Although these are centralized guidelines for all the European Union states, this does not warrant any service provider registered in Finland to do business in any other member state without obtaining a license from that country. This is obvious as all the member states have different rules of operation in Finance.
The 5th Anti-money Laundering Directive (AML) is an improvement in the 4th AML in the sense that this is specifically designed to counter the challenges posed by cryptocurrency. The biggest drawback and advantage of cryptocurrency is the anonymity related to its handling. This is a logistical and intelligence nightmare for the government, and a goldmine for people involved in crime, money laundering extortion, etc. A lot of cryptocurrencies also flow through the darknet where it is impossible to track the origin of any transaction. This brings us to the 5AML that requires all the cryptocurrency service providers to be registered with appropriate domestic authorities like Germany’s BaFin, or the UK’s Financial Conduct Authority.
Because of these changes, more mainstream businesses will be able to implement the use of cryptocurrency thereby increasing its market. This will enable European companies to compete with Asian markets which have already pulled Crypto under the legislative umbrella, thereby ensuring mainstream and supervised usage.
Another very important effect that these measures have in asserting cryptocurrency as a white-collar form of money is that it will help create an atmosphere wherein everyone has some form of trust using these digital payments. It will somewhat be a similar transition to that of cash-to-cards. For crypto to be a success it needs to broaden its wavelength of customers and all these steps will go a long way in achieving that.
Even before the order could get the President’s approval, steadfast steps can already be seen in motion with Bitcoins. A marketplace operating out of Helsinki announced that they are working on ways to improve in the light of the new guidelines. They have created a new account registration system in which the users will be able to get their basic information authenticated during the sign-up process itself.
Conclusion
The ease of access and reduction in logistics cost provided by cryptocurrency is certainly unquestionable, but the risks that follow are too very serious to be ignored.
Therefore, such changes in the law are necessary to keep up with the ever-evolving digital world and ever-growing capabilities of people with nefarious intent.