Name
Global FinTech Guide
Country _ Name
Albania
SectionTitle
DLT and cryptocurrencies
Body
FinTechs belonging to this category offer financial services using crypto currencies. This category also includes FinTechs utilising blockchain and distributed ledger technologies (DLT) upon which Bitcoin and Ethereum are based, among others. FinTechs develop and do research in this field in order to create new services – e.g. crypto currency exchange markets, wallet providers, NFTs-related services, new payment services, "smart contracts" or new clearing and settling services.

Introduction

Attitude of the country towards financial services using crypto currencies

Albania became one of the first countries in Europe to adopt a regulatory framework for cryptocurrencies on 21 May 2020 – i.e. Law no. 66/2020 on "DLT-based Financial Markets" (DLT Law). This law is applicable to all activities and subjects that perform their activity on financial markets based on Distributed Ledgers Technology (DLT) in and/or from the Republic of Albania. The law aims to regulate: (i) the issuance of digital tokens and virtual coins through Initial Coin Offering and Security Token Offering; (ii) licensing of activities related to DLT; (iii) monitoring and oversight of entities operating the distribution activity related to Digital Tokens and Virtual Coins; (iv) trading and storage of Digital Tokens and/or Virtual Coins; (v) the Digital Token agent; (vi) the innovative service provider; and (vii) the automated enterprises of collective Digital Token investment. Beyond Digital Tokens and Virtual Coins, the Law aims to monitor all infrastructure where DLT operates and defines a legal framework for cryptocurrencies.

Nevertheless, at the moment in Albania, cryptocurrencies are used for investment purposes by a few individuals and are not accepted as a payment method.


Legal affairs

Obligations and requirements to provide financial services using crypto currencies described above

The virtual assets legal framework in Albania is currently regulated by the DLT Law which entered into force on 1 September 2020, and law no. 9917, dated on 19.5.2008 "for the prevention of money laundering and financing of terrorism" (hereinafter the AML Law).

The DLT Law regulates the issuance of Digital Tokens/Virtual currencies and the licensing, monitoring and supervision of entities that are engaged in the distribution, trading and custody of Digital Tokens and Virtual Currencies.

The abovementioned law provides for five (5) types of licenses issued by the Albanian Financial Supervisory Authority – i.e. the Authority and, National Agency for Information Society (hereinafter the AKSHI), namely

  • Digital Token Agent license: issued by the Authority for legal persons that act as legal representatives of the licence holders while also carrying out and monitoring all the regulatory obligations thereof.
  • DLT Exchange license: issued by the Authority and AKSHI for platforms facilitating the exchange of digital tokens, virtual currencies, and FIAT money. These are separated into three (3) categories, depending on the type of tokens that are listed for trade (i.e. Utility Tokens, Asset Tokens, Payment Tokens and Security Tokens).
  • Third Party Custodian Wallet Provider license: issued by the Authority and AKSHI for entities carrying out custody services for holders of digital tokens/virtual currencies.
  • Innovative Service Provider: issued by the AKSHI for entities that act as system auditors and carry out all technological assessments in the name and on behalf of the license holder.
  • Automated Collective Investment Undertaking license: issued by the AKSHI for collective investment undertakings which are already licensed, which also engage with digital tokens via the usage of systems carrying out robo-advisory and algorithmic trading functions.
All the above licenses are issued without expiration of the term. This means that the licensee will not need to renew the license from time to time but will only have to pay the annual fee in order for the license to remain active.

The application for licensing must be submitted by the requesting entity to the authority responsible together with some other documents, including confirmation through the collection mandate of the payment of the license application fee, a certificate that the entity is registered in Albania as a joint-stock company, certificate of appointment of the board of directors or the supervisory board, self-declaration that they possess the necessary professional skills and will undergo continuous training certification by AKSHI, that the innovative technology agreement is in accordance with the provisions of this law, documentation certifying that it has approved and taken the necessary measures regarding the establishment of an internal system to prevent and withstand cyber-attacks, as well as to offer customers a means of recourse in case of fund loss, documentation proofing that it has approved, and a comprehensive risk management program, which should also include measures taken in the context of cybersecurity etc.

Each DLT Exchange must have a minimum initial capital of ALL 20 million – approx. EUR 200,000, up to ALL 90 million – approx. EUR 900,000, depending on the license category. For TD agents and third-party portfolio custodians, the minimum initial capital must be at least ALL 18 million – approx. EUR 180,000.

The registration and license fees are as follows:

  • Digital Token Agent license – Filing Fee approx. 1,000 EUR; Licensing Fee approx. 2,500 EUR;
  • DLT Exchange license:
    • Category "A" – Filing Fee approx. 5,000 EUR; Licensing Fee approx. 3,000 EUR.
    • Category "B" – Filing Fee approx. 8,000 EUR; Licensing Fee approx. 4,000 EUR.
    • Category "C" – Filing Fee approx. 10,000 EUR; Licensing Fee approx. 5,000 EUR.
  • Third Party Custodian Wallet Provider license – Filing Fee approx. 5,000 EUR; Licensing Fee approx.
  • Innovative Service Provider & Automated Collective Investment Undertaking license – Filing Fee 0 EUR; Licensing Fee approx. 3,000 EUR.

Additional comments regarding the legal situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area

The relevant authorities have adopted various bylaws for purpose of completing all the legal framework that will regulate the virtual currencies market, including regulations for licensing of DLT Exchange and licensing of Third Party Custodian Wallet Provider On the other hand, the AML Law has been amended, reflecting the Financial Action Task Force recommendations in respect of inclusion of Virtual Assets and Virtual Assets Service Providers (VASP) as subjects of the law. Therefore, FinTechs should undertake due diligence and enhanced due diligences procedures when interacting with their clients.

Albania has adopted a new law on income tax, effective as of January 1, 2024. This law brings forth substantial alterations to income tax regulations, notably encompassing the taxation of mining and other transactions involving virtual assets or crypto assets.


Economic conditions

Market size for financial services using crypto currencies and biggest companies in this business area

It is a relatively small and undeveloped local market as there are no entities licensed as providers of virtual tools, But on the other hand, in Albania, the investments in foreign cryptocurrency markets are expanding and increasing. According to the data provided by "Chainalysis" algorithm, the number of the investment portfolios in Albania is estimated at around 50,000as the country is preparing for a new step in this sector. According to unofficial data, the total value of cryptocurrency portfolios held by Albanian investors is estimated to range between USD 60 to 90 million.

Additional comments regarding the economic situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area

N/A



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