Name
Global FinTech Guide
Country _ Name
Finland
SectionTitle
ICO/token sale
Body
Companies and projects have increasingly relied on the sale of digital assets, or tokens, as a means of fundraising. These tokens generally do not grant the holders an ownership interest in the issuing company or project, but may provide governance rights, access rights or other utility. This has been conducted through public sales known as initial coin offerings (ICOs), proliferation through token generation events (TGEs) or private sales, among other mechanisms.  While showing characteristics of traditional methods of fundraising, there are a range of unanswered questions related to the legal classifications of such products. As ICOs and TGEs will usually be distributed online and internationally, there is usually no single legal framework applying to such transaction, and the legal framework of each market in which the tokens may be offered or sold needs to be considered.

Introduction

Attitude of the country towards ICOs/token sales

Finnish securities legislation is technology-neutral, which means that a virtual currency issued through an initial coin offering ICO could potentially be classified as a security or a financial instrument. A security is defined as a negotiable asset offered to the public together with other similar securities. The FIN-FSA uses specific criteria to assess whether a virtual currency qualifies as a security; if it does, the relevant securities regulations must be followed.


Legal affairs

Presence of any explicit regulation on ICOs and the issuance of token/coins

In Finland, the regulation of ICOs and the issuance of crypto-assets is primarily governed by the recent Act on Crypto-Asset Service Providers and Crypto-Asset Markets (402/2024). This law provides explicit definitions and requirements, in particular for asset-referenced tokens (ARTs) and electronic money tokens (EMTs), both of which require authorisation prior to issuance. Typically, the issuer will also act as an offeror or seek admission to trading on a platform.

Cryptoassets that fall outside the categories of ARTs and EMTs do not require authorisation for issuance, public offering or admission to trading. However, offers of these assets must still comply with specific requirements set out in the Markets in Crypto-Assets (MiCA) Regulation. A key requirement is the production of a crypto-asset white paper, which must contain key information about the issuer, the intended use of the capital raised and the associated investment risks.
If the issuer and the offeror are separate parties, no authorisation is required for the offer or admission to trading of ARTs or EMTs, provided there is written consent from the issuer. However, the issuer remains responsible for preparing a comprehensive crypto-asset white paper.

The MiCA regulations came into effect for businesses issuing tokens or coins at the end of June 2024. MiCA governs the rules surrounding asset-referenced tokens, e-money tokens, and utility tokens, requiring a new authorisation which will be granted EU-wide for successful firms. For companies that offer token custody and administration services, the exchange of fiat currencies for crypto-currencies and reception and transmission of crypto-assets, among a range of other activities, are considered crypto-asset service providers under MiCA. CASPs will similarly require authorisation (which will grant EU-wide passporting rights) from December 2024.

Presence of any explicit restrictions on ICOs or the issuance, distribution and/or transfer of token/coins

There are no explicit restrictions on ICOs or the issuance, distribution and/or transfer of tokens/coins.

Obligations and requirements to issue token/coins

Issuance, offering to the public or seeking admission to trading of crypto-assets other than ARTS and EMTs does not require authorisation. The MiCA Regulation contains some other requirements, however, for public offerors and persons seeking admission to trading of these crypto-assets. The main requirement is the obligation to draw up a crypto-asset white paper, namely an information document containing mandatory disclosures. Offering to the public or seeking admission to trading of ARTs and EMTs also does not require authorisation if the offeror or the person seeking admission to trading is a different person than the issuer. However, offering to the public or seeking admission to trading of ARTs or EMTs on behalf of the issuer requires the written consent of the issuer. Regardless of such an arrangement, the issuer of the ART or EMT retains the obligation to draw up a cryptoasset white paper.

Classification of token/coins in the jurisdiction

The MiCA Regulation divides crypto-assets into two categories:

  • crypto-assets that aim to stabilise their value by referencing another value or right or a combination thereof; and
  • other crypto-assets.
The first category includes asset-referenced tokens (ARTs) and electronic money tokens (EMTs). An EMT is a crypto-asset that aims to stabilise its value by referencing one, and only one, official currency. An ART aims to maintain a stable value by referencing any another value or right. The reference for an ART can therefore be, for example, a combination of several currencies, i.e. a basket of currencies, but not only one official currency.

The second category includes all other crypto-assets. In particular, this means crypto-assets that do not aim to stabilise their value. The second category includes so-called utility tokens, which provide access to products or services offered by the issuer of the token.

Presence of a duty to publish a prospectus bevor offering token/coins to investors
According to the MiCA regulation issuers of ARTs and EMTs do not have to publish a prospectus but they must produce a detailed crypto-asset white paper, outlining key information such as the issuer’s details, the rights attached to the tokens, the technology involved, and the risks associated with the asset. This white paper must be approved by the FIN-FSA and published on the issuer’s website before the token is offered to the public or admitted for trading.

In addition, the marketing of these token/coins must be clear, fair, and consistent with the information provided in the white paper. Marketing material must be submitted to the FIN-FSA for review, especially for ARTs and EMTs, and include a right of redemption against the issuer. In case of any significant changes, the white paper must be updated and re-submitted for approval, ensuring that all modifications remain public on the issuer's website for as long as the offered token/coin is in circulation.

Presence of AML/KYC requirements that are needed to be fulfilled regarding (i) the initial issuance of token/coins and (ii) any following transfer of token/coins to third parties

Under the Act on Preventing Money Laundering and Terrorist Financing (AML Act, 444/2017) and MiCA, entities involved in issuing crypto-assets are subject to AML and KYC obligations. These entities, defined as virtual currency providers, must perform customer due diligence to verify the identity of their customers and report suspicious activities. The AML requirements also apply under the EU’s Fifth Anti-Money Laundering Directive, which Finland has implemented with some additional measures.

Any subsequent transfer of tokens to third parties must also comply with the same AML/KYC requirements. Virtual currency exchange services and wallet providers must conduct CDD, particularly for transactions exceeding certain thresholds, and ensure they monitor and report any suspicious activity to the authorities.

Additional comments regarding (i) the legal situation for ICOs/token/coins and (ii) any following transfer of token/coins to third parties

N/A.


Economic conditions

Market size for ICOs/token sales and existence of any previous regulated ICO/token sales in the jurisdiction

N/A.

Additional comments regarding the economic situation for ICOs/token sales or what companies must be aware of in this business area

N/A.




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