A Closer Look On Bitcoin Ecosystem in Finland
These days the Finnish bitcoin scene mostly remains in the shadows, with only occasional news and a few startups being known to community. However, thanks to favourable bitcoin regulation and early bitcoin adoption, the homeland of Nokia can be also a great starting point for cryptobusinesses. We tried to figure out what’s happening in this nordic country with the help of Martin Albert from Bitalo and Henry Brade from Prasos.
What About Regulation?
Back in 2013, Finnish tax authorities released a special instruction for cryptocurrency taxation. According to the ‘unofficial’ translation, virtual currencies were to be treated as no ‘real, official currency’, still being legal to use and to trade. The gains were to be taxed as capital gains or income gains.
The capital gains approach, according to the instruction, is usually applied to trading and investment activities. In this case, ‘the BTC spent is calculated at the time of spending, and the cost of acquiring them is determined by when they were bought’ and losses were not tax-deductible.
When someone obtained coins via mining, the authorities planned to use regular income tax approach. The value of coins had to be counted at the current exchange rate.
The businesses selling goods or services for bitcoins would have to pay the income taxes corresponding to the exchange rate at the daily exchange rate if available, ‘otherwise, the value agreed upon by the parties of the transaction is used’. Losses would be tax-deductible.
However, in November 2014, almost one year before the European High Court’s ruling, Finnish regulators classified bitcoin as a VAT-exempt financial service. Thus, it is much easier to do bitcoin business in the country now.
“Finland and all Nordic Countries are well known for big government, high state quotas, and high taxes. People here love the state and people even love to pay taxes, also because corruption is a bit lower than in other parts of the world. There is no real cash economy, even smallest purchases are paid with credit card. Bitcoin is more approached from the technological side or intellectual side and not so much used to solve actual day to day problems.
However, surprisingly the state here is very relaxed about bitcoin and as far as regulation is concerned, there do not apply any special rules for handling bitcoin. There is no special banking license required and there are no special KYC rules. Profits from bitcoin speculation are of course fully taxable and many people here that I know put their bitcoin profits voluntarily in the tax declaration,” Martin Albert, CEO of Bitalo and one of the local bitcoin embassy enthusiasts, told us.
There are still some concerns about EU-wide regulation rules, though.
“In terms of regulation we are concerned about the upcoming changes in EU cryptocurrency regulation. That may harm our business in some areas. In Finland, the regulation is currently very low which is a big benefit. In terms of taxation, there have been problems, the tax administration is very eager to tax all Bitcoin-related activity as much as possible. Politicians are not very well educated in Bitcoin affairs and it’s not something they discuss much but government organizations (tax admin, police, customs etc) do know a lot about Bitcoin,” said Henry Brade, CEO of Prasos and Coinmotion.
What Is The State of Finnish Bitcoin Industry and Community?
“The Bitcoin Industry is actually quite healthy here thanks to many interesting factors. Finland is a cold and dark country in the North of Europe and the country has been isolated for a very long time: In the east was the iron curtain, in the north was only ice and snow, the west had more or less similar kind of welfare states and in the south is the Baltic sea. This made it possible for Finland to implement a lot of regulations in the classical industries just to mention minimum wage laws, employment restrictions of all kind and all these things drove people into IT related businesses, not only Nokia used to be very big. Besides that Finland simply lacks big industry like big car manufacturers, the lack of chemical industry etc, however people here have a high level of education, speak fluently plenty of languages (since no one on this planet can ever learn Finnish) and it was quite natural that Bitcoin will thrive in Finland,” Martin Albert went on to describe the current situation.
Even before the first European bitcoin ATM was installed in Finland’s capital of Helsinki, the major bitcoin company, LocalBitcoins, had launched its services therein, swiftly becoming the world’s leading peer-to-peer exchange for cryptocurrency users. The other major places to buy and sell cryptocurrency in the country are bitcoin portal Bittiraha and Coinmotion exchange. The latter one has been recently acquired by the owner of Bittiraha, bitcoin broker Prasos, thus leading to further consolidation of local bitcoin market, as reported by Coindesk. Interestingly enough, immediately upon the acquisition, the CEO of Prasos, Henry Brade, announced a zero-fee campaign for Coinmotion in order to attract more traders into using their services.
“Currently, LocalBitcoins is already a global major player in the Bitcoin market but we plan on becoming one as well. With the exchange & wallet platform Coinmotion and physical bitcoin manufacturer Denarium we plan to become a major force in the global Bitcoin market,” the company’s CEO commented to ForkLog.
We could not find any evidence of full-fledged cryptocurrency mining in Finland, probably because the electric power is too expensive there.
“BitFury used to have a mining facility here but not anymore. Currently, I’m not aware of any large miners. Some small hobbyist miners do exist. Mining not a major business here,” Henry Brade explained.
However, if the electricity costs were a bit less of an issue, Finland could perfectly fit as a perfect place for mining facilities, because “cooling of hardware is easier than in countries further south”.
The local Bitcoin Embassy describes a thick agenda of events, so we assumed the community in Helsinki is vast. However, it seems there are many things to do yet.
“The Bitcoin embassy in Helsinki is still very new and most people just come to exchange money. We are trying to change this and want to be the first point of contact and start a real community movement. Still, Fins are very shy people and do not like events too much, but in January with minus 20 degrees no one will go outside unless you offer free beer,” points out Martin Albert, being also one of the embassy activists.
Thanks to embassy’s work, Helsinki has the most active community with at least one live meeting per month. Active community is in the hundreds and it mostly consists of Bitcoin early adopters, business owners, and some new people show up each time as well, according to Brade.
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