By Edward W. Mandel
With crypto’s first decade now behind us, it’s time to look forward to what’s to come.
We all know what innovative countries dominated the early years of this space: Estonia, Malta and Switzerland among many others. But now let’s consider those countries which we at BQT consider most likely to take the lead going forward. After due research and consideration, we’ve narrowed it down to four, in no particular order: Taiwan, Israel, Argentina and today’s focus: Finland.
Policies and popularity
To start with, Finland is part of the European Union and, while it’s not considered a “core” member, maybe it should be. Geographically, it’s larger than the United Kingdom or Italy. In terms of gross domestic product, it beats Ireland or Greece. Most tellingly, its GDP per capital is higher than that of France or the UK.
And, as an EU member, Finland must adhere to Brussels’s regime governing crypto. As a necessary first step, the EU crafted a working definition of cryptocurrency: “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically.” The union’s supervisory authorities also released a joint statement warning that crypto assets are “highly risky and unregulated products and are unsuitable as investment, savings or retirement planning products.”
Based on those premises, crypto exchanges and wallets fall under the EU’s anti-money laundering and anti-terrorist financing law, meaning that due diligence must be performed on each participant. Still, court decisions have established that trading crypto assets is exempt from value-added tax throughout all member states.
On its own account, Finland has only recently adopted crypto-specific law, the Act on Virtual Currency Providers, which will be enforced by Finnish Financial Supervisory Authority. It’s essentially a restatement of the EU’s AML-ATF directive.
Finland’s central bank has backed off its initial skepticism and has since indicated that it sees potential in this space, while its tax authority has been collecting capital gains on crypto trading since as far back as 2013.
The US Library of Congress has an excellent roundup of crypto regulation worldwide, although its Finland chapter awaits updating.
One of the cool things about the EU’s growing acceptance of crypto is the worldwide map generated by its Blockchain Observatory and Forum, a Brussels-based initiative of the European Commission. We opened it up and zoomed in on Finland.
While it appears from this view that Finland’s blockchain community is centered in Helsinki, that’s not entirely accurate. Zoom in one step further and you’ll see that it’s split between the capital city and a western exurb called Espoo. That said, it’s not exactly a complete map. Most of the companies listed below aren’t on it.
Leading companies
Already, five companies have registered with Fin-FSA under the new law: LocalBitcoins, Northcrypto, Prasos, Bittimatti (formerly Prasos Cash Management) and Tesseract Group.
“LocalBitcoins operates a global peer-to-peer bitcoin marketplace. Northcrypto provides an exchange service for BTC and LTC for EUR. Tesseract Group, formerly Whalelend, provides asset management, OTC trading, and lending services,” according to Kevin Helms at Bitcoin.com. “Prasos offers crypto exchange and asset management services under four different brands.”
Of these, LocalBitcoins is clearly the most substantive. According to Hub13, the Helsinki fintech association, this company has generated €23.9 million ($26.5 million), making LocalBitcoins Finland’s 12th-largest fintech firm of any kind. Hub13, incidentally, has at least 11 members which are focused on either crypto or blockchain more broadly.
The blockchain startup that seems to be Streamr, which doesn’t seem to want to be known as a blockchain company. Hub13 categorizes it as a “Data & Analytics” firm, and the EU considers it “Tech, IT, Telecommunications”. Even so, Streamr is building an open-source blockchain platform to exchange real-time data and, already post-pilot, it has actual users. Headquartered barely below the Arctic Circle, it might be the northernmost-based company of any kind that is commercially viable. Apparently, Mitsubishi UFJ Financial Group — fronted by US subsidiary UnionBank — believes in the company enough to provide some backing.
If a great name is all you need to succeed, then Helsinki’s Heat Ledger is going to the moon.
Heat’s blockchain technology lowers the entry barrier for any business to run their own microservices and benefit from all the efficiency gains of a blockchain infrastructure,” according to its landing page. “The Heat crypto platform is equipped to serve both private and public networks and has virtually unlimited storage capacity through its custom storage engine.”
Latest news
Reports are generally positive coming out of this Nordic country, which perennially appears at or near the top in terms of education, economic competitiveness, civil liberties, quality of life, human development, press freedom, state stability, gender equality and overall happiness. (And yet it also has an amazing heavy metal scene. I suppose that’s as healthy a way of getting out your aggressions as anything.)
And yet the blockchain community has not always been able to capitalize on the good news. For example, the Finnish Immigration Service began providing asylum seekers who lacked documentation a blockchain-backed card from which they could use to access funds as well as prove their identity. Unfortunately the startup, MONI, that issued these went belly-up in 2019 and could no longer support the effort. The government agency then had to scramble to replace the MONI cards with more traditional debit cards.
Even so, BQT likes the view from the north shore of the Baltic Sea. Finland has proved itself to be a forward-thinking country. It’s making all the right moves, from incubating blockchain developers at the Helsinki Fintech Farm to holding nationwide “fire drills” to fend off ransomware attacks that denominate extortion in bitcoin. The crypto media might be reporting more from Estonia at the moment, but we have little doubt that Finland is poised to catch up and perhaps surpass its neighbor.
Edward is an Ernst and Young Entrepreneur of the Year Finalist, Blockchain Enthusiast and visionary behind many successful organizations. An avid entrepreneur, Edward has a knack for designing distinctive business models complemented with superior technology to deliver unparalleled service and profitability. Edward also has been advising and consulting for various successful Blockchain technology and recently launched BQTX.COM exchange, BQTUniversity.io Blockchain Education Platform, BQTexchange.com beta-P2P exchange helping traders connect with each other to leverage their crypto assets.
The information can be found online at BQT.io, on Telegram @BQTCommunity.
