With the Act on Virtual Currency Providers coming into force on 1 May, FIN-FSA will from now on register virtual currency exchange services, custodian wallet providers and issuers of virtual currencies in Finland. 

FIN-FSA said that the registration will ensure that providers comply with various requirements, including anti-money laundering and combatting the financing of terrorism (AML/CFT) rules, those on the marketing of services, the segregation of client money and own funds, the keeping and protection of client money and those pertaining on the reliability of the provider.

"Going forward, only virtual currency providers meeting statutory requirements are able to carry on their activities in Finland," FIN-FSA said.

Providers that do not comply with those statutory requirements will not be allowed to continue to trade in Finland and may face a fine.

The regulator also announced that a briefing will take place on 15 May in at the Bank of Finland's auditorium in Helsinki for providers already operating in Finland and those planning to do so.

The briefing will cover FIN-FSA's position on when virtual currency providers must register in Finland, the steps and schedule of the registration procedure, as well as draft FIN-FSA regulations and guidelines applicable to virtual currency providers.

In spite of the new supervision and registration, the watchdog was keen to point out that the risks related to virtual currency investments remain unchanged. It said:

"The risks include sudden major fluctuations in value, data security threats pertaining to exchange services and custodian wallet providers, and the nature of several virtual currencies as speculative investments not involving any inherent source of return."

The regulator said that investors should therefore "carefully" assess the risks related to virtual currencies before making any decisions, which echoes a warning it issued in November 2017 on the risks surrounding initial coin offerings.

FIN-FSA explained that the Act is based on the EU's Fifth Money Laundering Directive, which must be implemented in national legislations by 10 January 2020.

The Act's main aim is to introduce virtual currency providers into the scope of AML regulation.

However, it does not introduce requirements in respect of, for example, risk management or no capital requirements are imposed.

"These are examples of typical areas of supervision by the FIN-FSA regarding other types of supervised entities. Therefore, the regulation proposed for virtual currency providers should not be compared as such to regulation concerning other financial market participants, since the area now falling within the supervision of the FIN-FSA is much narrower compared to other financial market participants," the regulator said.