Albania is all set to bring in a group of crypto-focused laws in the coming days, which will usher in a licensing mechanism for exchanges and make way for taxing the crypto profits of its citizens.
Various factors will come into play that will influence Albanian authorities’ decision to grant a license to exchanges, such as a detailed business plan, capital availability, source of funds, and investor protection mechanism, among others.
Although Albania already allows licensed exchanges to operate within its borders, no licensed digital asset trading firms are active in the country.
The Albanian Financial Supervision Authority has approved a licensing regime for cryptocurrency exchanges. This comes ahead of Albania’s implementation of a digital asset taxation policy that will allow the government to tax income and profits from cryptocurrency investments by the end of 2023.
Under the licensing law, distributed ledger technology exchanges are referred to as exchanges where blockchain is used in combination with digital tokens, digital assets, and fiat currency.
As per the latest licensing regime, DLT exchanges will fall under one of three categories; those that use just digital assets and tokens, those that use fiat and virtual currency, and those that trade digital securities.
To obtain the license, the exchanges must submit detailed documentation of their business plans, source of capital, company organization, and reputation. The application will then be passed to a joint commission to review and evaluate it in line with the law.
The relevant authorities will decide to grant a license based on protecting the interests of investors and the public, promoting stability and transparency of financial markets, adequate security systems, protection from cyber-attacks, and ensuring compliance with the law.
Other requirements for licensing include having enough capital, either in funds or through an insurance policy for professional liability. The regulators will also evaluate the company administrator, supervisory board, board of administration, and other key stakeholders.
With this move, which is a first for its region, Albania is strengthening the crypto law “Financial markets based on distributed ledger technology,” which it passed in 2020 and entered into force on September 1st, the same year.
However, the law hasn’t been implemented yet because of the lack of bylaws. Last year, in November, the authorities (ASFA) approved two regulations on capital adequacy and on licensing requirements for entities working with digital assets.
Earlier this year, the Albanian parliamentary assembly drafted a resolution to order the Financial Supervisory Authority (FSA) to adopt new regulations regarding cryptocurrencies before the end of the year as the country hopes to take advantage of the benefits presented by this nascent blockchain technology. While Albanian law allows crypto trading firms to operate legally within its borders, no licensed entities currently work within Albania.
It also referenced the Council of Europe’s Committee of Experts’ report on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval), which examined new international standards applied to virtual assets, including the providers of crypto assets. As per the report, additional measures were needed to deal with cryptocurrency risk.
“The next monitoring report for Albania concluded that this country has not significantly improved its measures to combat money laundering and terrorist financing by the FATF recommendations,” stated the report.
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