In Finland, blockchain technologies are making significant strides, especially in the finance and decentralized finance (DeFi) sectors. A key highlight is the EUROe stablecoin launched by Membrane Finance, which stands out as a compliant, euro-backed electronic money token, exemplifying Finland’s innovative role in digital finance. In the DeFi landscape, Stani Kulechov, the founder of Aave, leads as a prominent figure with Aave being one of the world’s leading decentralized lending platforms.

Coinmotion, another pioneer established in 2012, serves as a major crypto-asset exchange, contributing to the local blockchain ecosystem. Equally notable is Equilibrium Group, which is advancing blockchain infrastructure on a global scale with projects like Gevolut, a Layer 1 blockchain, and SnarkOS, focusing on peer-to-peer networking. These projects highlight Finland’s strong position in both blockchain development and technical expertise.

Beyond finance, blockchain adoption is rapidly expanding into other sectors. Notably, alternative investment fund managers (AIFMs) such as Kvarn Capital and Equilibrium Ventures are at the forefront of this trend, actively incorporating crypto-asset-based investment structures. Their efforts demonstrate how blockchain is being integrated into traditional financial systems, further driving the growth and acceptance of digital assets in Finland.

The Finnish art scene is also embracing web3, with the Finnish National Gallery’s Alusta project serving as a prime example—a digital web3 art gallery showcasing the intersection of art and blockchain technology. These developments demonstrate Finland’s broad integration of blockchain technology across various industries.

In Finland, the regulatory framework for blockchain technologies is primarily shaped by EU-level legislation. The most significant recent developments include the adoption of the Regulation 2023/1114 on Markets in Crypto Assets (MiCA), the revised Regulation 2023/1113 on Information Accompanying Transfers of Funds and Certain Crypto-Assets (TFR), and the Regulation 2022/858 on a pilot regime for market infrastructures based on distributed ledger technology (the ‘Pilot-regime’). MiCA and TFR establish a harmonized legal framework for crypto-assets across the EU, enhancing transparency and security in crypto transactions, while the Pilot-regime facilitates the development of distributed ledger technologies and crypto-assets that qualify as financial instruments.

In addition to EU-level regulations, the Finnish Payment Institution Act (Maksulaitoslaki 297/2010) plays a crucial role in offering payment services related to crypto-assets. According to MiCA, CASP cannot provide such services without obtaining a separate license or partnering with a third-party service provider authorized to offer those services. Hence, VASPs have typically applied for a Payment Institution (PI) or Electronic Money Institution (EMI) license to offer a broader range of services related to their crypto-asset operations.

To adopt MiCA and the TFR, Finland has enacted the Crypto-Asset Service Provider (CASP) and Crypto-Asset Market Act, which replaces the previous Finnish Virtual Asset Service Providers (VASP) Act based on the EU’s 5th Anti-Money Laundering Directive (5AMLD). The CASP definition is somewhat broader, despite no longer covering the issuance of crypto-assets other than Electronic Money Tokens (EMTs) or Asset-Referenced Tokens (ARTs). It is also more specific, recognizing 10 distinct crypto-asset services, unlike the VASP definition. This change is reasonable and reflects the evolving regulatory landscape.

In order to make the transition from VASPs to CASPs seamless when the MiCA becomes fully applicable on 30 December 2024, a transitional provision has been included in MiCA allowing VASPs to operate until 1 July 2026 or until they obtain a CASP license under MiCA. However, the application of this provision is left to the discretion of the Member States. Finland has decided to adopt this transitional provision, and it provides that VASPs actively engaged in crypto-asset operations before 30 October 2024 may continue to operate as VASPs until 30 June 2025, or until they obtain CASP license under MiCA, provided that they apply for a CASP authorisation by 30 October 2024. Therefore, the transitional provision applies only to VASPs which:

• actively provide crypto-asset services during the period prior to 30 December 2024, and
• apply for CASP authorisation by 30 October 2024 (more information about the CASP authorisation can be found in the answer to the question 8).

The Finnish transitional regime can be considered logical, as the purpose of it is to ensure that only service providers that comply with previous regulations and are active in the market have leeway to adapt to the new regulation without having to interrupt their services. It also aims to ensure that the integrity of financial systems is preserved. This approach is crucial to ensure that the transition is seamless and that compliant actors continue to thrive under the new regulation as well as demonstrates Finland’s commitment to fostering a stable and trustworthy crypto-asset market.

The principal regulator overseeing blockchain technologies in Finland is the Finnish Financial Supervisory Authority (FIN-FSA), responsible for licensing and supervising crypto-asset service providers, as well as ensuring compliance with EU regulations, particularly anti-money laundering (AML) and counter-terrorism financing (CTF) requirements. Additionally, Sitra, the Finnish Innovation Fund, plays a key role by providing decision-makers with information on blockchain technology and crypto-assets, contributing to informed regulatory development.

Overall, the Finnish government and regulators have a positive attitude towards blockchain technology, recognizing it as a significant opportunity for the Finnish economy. This supportive stance is reflected in initiatives like those led by Sitra, the Finnish Innovation Fund, which actively researches and provides insights into blockchain’s potential, such as its role in sustainable finance. Another example is the Finnish National Gallery’s Alusta project, a digital web3 art gallery that demonstrates the integration of blockchain technology into the art sector.

However, while these applications showcase the potential of blockchain, authorities have also emphasized that the technology is still relatively immature, with aspects such as cost-effectiveness, potential risks, and unforeseen challenges not yet fully understood. This balanced approach reflects Finland’s commitment to exploring blockchain’s benefits while remaining mindful of its limitations.

Regarding central bank digital currencies (CBDCs), Finland’s situation is not unique and is the same as in other EU member states using the euro, as the Eurosystem—comprising Finland and other eurozone countries—is responsible for their development. This unified approach ensures that any potential future CBDCs benefit from shared expertise and regulatory coherence across the eurozone.

While there is not a national CBDC project specific to Finland, it is worth noting the launch of EUROe, a euro-backed stablecoin developed by Membrane Finance. Although EUROe is not a CBDC, it represents Finland’s innovative role in the digital finance space by providing a stable, regulated electronic money token compliant with EU regulations. As for CBDCs, concerns around privacy, such as how authorities might monitor and supervise CBDC transactions and the potential impact on citizens and society, are similar in Finland to those across the eurozone.

According to the MiCA a crypto-asset means a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology. In Finland, or in MiCA, crypto-assets are not explicitly classified as financial instruments, securities, deposits or pensions, as they are simply classified as crypto-assets. However, determining their status depends on the specificities of each crypto-asset and how they are used. For example, if a financial instrument utilizes blockchain technology, it remains classified as a financial instrument and is therefore outside the scope of MiCA.

In Finland, the regulatory treatment of DeFi depends on the level of decentralisation involved. If the DeFi protocol/application is only normally decentralised, meaning a central entity still exercises control, that entity may has been classified as a VASP and under MiCA, this central entity would be further regulated as a CASP, offeror or issuer – depending on the nature of operations. However, if a DeFi protocol is fully decentralised, with no identifiable central operator, it falls outside the scope of both current national regulations and MiCA. Consequently, fully decentralised DeFi protocols remain largely unregulated under Finnish law.

In Finland, financial service providers ­–including VASPs, CASPs and EMIs – are subject to the AML Act, which is based on 5AMLD.This Act requires companies to implement stringent customer identification and verification processes. Under the AML Act, companies must verify customers’ identities when establishing a permanent customer relationship, conducting transactions that meet certain thresholds, or if the transaction appears suspicious. If these requirements are not met, companies are prohibited from providing their services.

Furthermore, companies must maintain risk assessments, policies, and procedures aligned with the AML Act. Remote or digital onboarding is allowed but must be supported by additional security measures, such as verifying identity with extra documents or ensuring that payments come from previously verified bank accounts. AML Act also includes specific rules on sanctions, which must be followed.

The FIN-FSA provides additional guidelines (e.g., MOK 2/2023), detailing how companies should handle risk assessments, employee training, whistleblowing, customer due diligence, and data retention. It also clarifies when entities should contact the FIN-FSA or the Anti-Money Laudering Center under the National Bureau of Investigations.

Thus, where a central operator exists, this comprehensive regulatory framework ensures that crypto-assets are subject to strict AML and counter-terrorist financing (CFT) standards in Finland, which are also supported by the TFR Regulation. As mentioned earlier, fully decentralised DeFi protocols however remain largely unregulated when it comes to AML and sanctions as well.

In Finland, the taxation of crypto-assets is governed by the Income Tax Act and further clarified by the Finnish Tax Administration’s guidance on crypto-assets. While the Tax Administration’s guidance is not legally binding like an act, it plays a significant role in shaping the interpretation of crypto-asset taxation.

According to the guidance, crypto-assets are treated as commodities, which means that transactions involving the sale or exchange of crypto-assets are subject to capital gains taxation. This includes transactions where crypto-assets are exchanged for fiat currency, other crypto-assets, or commodities. The capital gains tax applies to any increase in value, and capital losses can be deducted in accordance with the Income Tax Act.

In case of mining, the income generated from Proof of Work activities is generally treated as earned income and taxed differently from capital gains. Activities related to DeFi and Proof of Stake, however, can trigger capital gains taxation as they involve the realisation of value from crypto-assets.

The structured approach ensures that individuals and companies engaging crypto-asset transactions in Finland are subject to clear and consistent tax obligations, which helps maintain fiscal transparency and compliance. Staying informed about the evolving regulatory landscape is essential for anyone involved in the Finnish crypto-asset market.

The use or trading of crypto-assets themselves are not prohibited in Finland. Thus, if a blockchain technology is used only for internal services, or if a person wishes to purchase, trade, or hold crypto-assets and act on their own behalf, it does not require any kind of license, permission, or registration.

However, the provision of such services has been and still is subject to licensing and regulation, previously under the Finnish VASP Act and now under MiCA. According to MiCA, a person shall not provide crypto-asset services, within the Union, unless it is a legal person or other undertaking that has been authorised as a CASP under MiCA or inter alia a credit institution, central securities depository, investment firm, market operator, electronic money institution, UCITS management company, or an alternative investment fund manager that is allowed to provide crypto-asset services pursuant to MiCA. CASP registration is applied in Finland from the FIN-FSA with a separate application and the process is estimated to take approximately 6-8 months. That said, there may be a backlog in the processing of the license applications, especially in the autumn of 2024, as the processing times according to MiCA are not yet applicable.

In addition to complying with general obligations imposed by MiCA, depending on the services provided, CASP must also comply with the specific obligations imposed by MiCA for that service. For example, CASP operating a trading platform for crypto-assets shall among other things lay down, maintain and implement clear and transparent operating rules for the trading platform.

In light of the above, as the use or trading of the crypto-assets are not prohibited, the generality of the trading depends on the other factors. As mentioned in the previous answer to the question 7, transactions involving the sale or exchange, including trading, of crypto-assets are subject to capital gains taxation. In Finland, an investor must pay 30% tax if the capital income does not exceed 30,000 euros per year and a tax of 34% must be paid is excess of this. Hence, taxation alone can make trading unprofitable, especially when it comes to private investors, and crypto-asset trading has therefore not become very popular in Finland.

To the best of our knowledge, no ICOs have taken place in Finland, primarily due to the strict regulatory environment prior to MiCA. Under the previous regime, the issuance of tokens often faced significant regulatory hurdles, such as the need for VASP registration, which made conducting ICOs challenging in Finland.

However, this is expected to change once MiCA becomes fully applicable on 30 December 2024. MiCA aims to create a harmonized legal framework for crypto-assets across the entire European Union, meaning that the issuance of tokens will be subject to the same rules and requirements in all EU member states, including Finland. This will eliminate the need for VASP registration for token issuances concerning other tokens than EMTs and ARTs in Finland, providing a clearer and more streamlined process for entities looking to launch ICOs. As a result, the regulatory barriers that previously hindered ICOs in Finland are expected to be significantly reduced, making it more feasible for such offerings to take place in line with the new, unified EU-wide regulations.

When it comes to the attitude of relevant authorities, the FIN-FSA, the European Securities and Markets Authority (ESMA), as well as the European Banking Authority (EBA) have issued warnings about the risks associated with ICOs and crypto-assets in general, such as potential fraud, insufficient regulation, and the volatility of the crypto-assets. It has been emphasised that individuals and companies interested in participating in or launching ICOs should be aware of these risks and ensure that they comply with all applicable legal requirements.

However, ICOs are not explicitly prohibited and as for now, MiCA sets comprehensive rules on making an offer to the public of a crypto-assets. According to MiCA, a person shall not make an offer to the public of a crypto-asset in Union unless that person:

1. is a legal person;
2. has drawn up a crypto-asset white paper in respect of that crypto-asset;
3. has notified and published the crypto-asset white paper;
4. has drafted and published the marketing communications, if any, in respect of that crypto-asset;
5. complies with the requirements for offerors laid down in MiCA.

These can be considered as the key requirements for ICOs, but this list of requirements is not exhaustive, and there are other requirements that should be considered. For example, entities falling within the scope of MiCA should also comply with applicable anti-money laundering and counter-terrorist financing rules of the Union, including in relation to ICOs.

It should be added that in case the MiCA does not apply, the token offering may fall under the scope of securities or investment products depending on the nature of the token and the rights it grants to investor, and therefore also other existing financial and securities legislation may apply to ICOs.

In Finland, legal and regulatory issues concerning the transfer of title or the granting of security over crypto-assets revolve around how these assets are treated under existing legal frameworks. Key considerations include the recognition of ownership, and the enforceability of security interests.

The ownership of crypto-assets is treated similarly to ownership of traditional objects, particularly in financial contexts. The basic principle is that a person who holds the private keys to a blockchain address is presumed to own the crypto-assets recorded at that address. However, this assumption can be challenged by other evidence, such as custodial arrangements or contractual agreements, which may provide alternative explanations for ownership.

A notable legal precedent in Finland regarding crypto-assets is the Supreme Court (korkein oikeus, or KKO) case KKO 2020:64. In this case, the KKO examined the ownership of bitcoin stored in a custodial account. When one of the parties became subject to bankruptcy proceedings, the KKO ruled that the mixing of assets in the custody account invalidated the other individual’s ownership claims, demonstrating how custodial arrangements can complicate ownership rights.

Additionally, under MiCA and prior VASP Act, CASPs and VASPs are required to separate customers’ crypto-assets from their own funds, ensuring greater security for customers in the event of enforcement or insolvency.

Thus, the transfer of title and granting of security over crypto-assets in Finland depends heavily on both possession of private keys and other legal agreements, as well as compliance with regulations such as MiCA, which ensures the proper segregation of assets. Ownership disputes are resolved based on who can demonstrate the most legally justified claim to the assets, using both blockchain records and additional agreements.

In conclusion, while there are no explicit prohibitions on transferring title or granting security over crypto-assets in Finland, the legal framework remains underdeveloped, and uncertainties persist, especially around the enforcement of security interests and the recognition of ownership.

In Finland, smart contracts are not explicitly regulated or prohibited, allowing their use within the legal framework. However, the EU-wide Data Act, which will be applicable starting in September 2025, introduces certain requirements for smart contracts. Specifically, smart contracts covered by the Data Act must include mechanisms to crease their operational and internal functions to terminate or suspend their execution to prevent unintended actions.

While Finland recognises freedom of contract, allowing private parties to establish agreements using smart contracts, it is essential to have clear legal and contractual agreements since smart contracts operate as computer code. These legal agreements help ensure the potential enforceability issues. Smart contracts differ from traditional contracts mainly due to their automated nature and reliance on code, which may lead to unique challenges regarding interpretation and enforcement.

DAOs are not currently recognised as legal entities under Finnish law. As such, we would categorize DAOs as digital smart contracts that allow participants (token holders) to make decisions based on pre-set rules. Since DAOs lack legal personality, they cannot hold rights, obligations, or property on their own name. Any legal actions, such as owning property or entering into contracts, must be attributed to the individuals involved in the DAO.

This creates a significant challenge in cases of liability and ownership, as DAOs themselves are not subject to legal responsibilities. Instead, the natural persons behind the DAO’s operation or action in the name of DAO may be held accountable. If a participant holds the majority of tokens and uses this majority power, they could be deemed responsible for DAO’s actions.

Furthermore, Finnish Law requires entities to be legal subjects to have rights and obligations, making DAOs a grey area in terms of governance and accountability. Although there is no specific legislation governing DAOs, participants in a DAO could still be expected to follow the Finnish law if they are located in or connected to Finland. However, due to the lack of clear regulations, the legal status of DAOs remains ambiguous, and the legal consequences for DAO operations in Finland are still uncertain. This legal uncertainty highlights the need for future regulation to address the unique structure and functionality of DAOs in Finland.

In Finland, there have not been any direct regulatory enforcement actions specifically targeting blockchain technology, as it remains largely unregulated at a broad level. However, Finnish authorities, particularly the FIN-FSA, have been proactive in guiding companies operating in the blockchain sector, especially when their activities require specific licenses. The FIN-FSA has issued regulations and guidelines, some of which are mandatory for VASPs and CASPs.

The Finnish Tax Administration has also provided clear guidance on the taxation of crypto-assets to ensure that blockchain-related activities are properly taxed under Finnish law. This approach contributes to Finland’s reputation for having a transparent, fair, and stable regulatory environment, making it an attractive destination for blockchain and fintech companies, especially when compared to the more uncertain regulatory frameworks in some other European countries, such as the Baltic states.

Overall, while no specific enforcement actions on blockchain have been reported, Finnish regulators remain active in providing necessary guidance and oversight where blockchain intersects with existing financial and tax regulations..

Several general laws and regulations, including data protection, can pose challenges for the use of blockchain technology in Finland. Finland adheres closely to the EU General Data Protection Regulation (GDPR), which governs how personal data must be protected. Additionally, Finland’s Data Protection Act and other regulations such as the Accounting Act and AML Act impose obligations on businesses, particularly with regard to data retention and privacy.

For example, under the AML Act, companies must retain customer data for at least five years after the end of customer relationship, which can limit the “right to be forgotten” under GDPR. In the blockchain context, this is especially relevant, as blockchain’s immutability conflicts with GDPR’s data erasure requirements.

Additionally, the new MiCA introduces further data privacy considerations. MiCA clarifies that if personal data is exchanged as part of a transaction involving crypto-assets, this transaction is not considered free, meaning such exchange must comply with GDPR requirements.

While there are no additional issues worth mentioning, it is important to highlight the advantages of Finland’s blockchain and web3 landscape. Finland’s reputation for legal certainty and transparency makes it an attractive base for blockchain ventures. The Finnish legal system is known for its consistency and lack of arbitrary rulings, offering companies a more stable environment compared to many other nations. This predictability is particularly valuable in the blockchain sector, where regulatory environments often shift and vary widely across regions.

In the authors’ view, once the Markets in Crypto-Assets Regulation (MiCA) becomes fully applicable, Finnish blockchain developers are likely to establish their operations in Finland rather than in less familiar jurisdictions. MiCA’s uniformity across EU member states will eliminate the need to navigate different rules in each country, making Finland an even more appealing location. Additionally, the EU’s Regulation 2022/2554 on digital operational resilience for the financial sector (DORA) is expected to further promote the development of secure fintech solutions, including those governed by MiCA. This regulatory consistency simplifies compliance and strengthens Finland’s position as an attractive and secure option for blockchain businesses looking for a reliable operating environment.