The Fintoken Act: Albania at the Centre of International Attention for Blockchain and Digital Assets

Mario Tonucci’s column on the Fintoken Act

The “Mario Tonucci Column”. The renowned lawyer and Founder of Tonucci & Partners launches his new contribution to Albania Economia with an in-depth analysis of the FINTOKEN ACT, a pioneering piece of legislation that places Albania at the centre of international attention.

Tonucci & Partners Albania

Tonucci & Partners Albania is currently one of the most highly recognised international law firms for the quality of its legal services in Albania.
The Firm started its activity in Albania in 1995 and is recognised among the leading law firms in the country, providing clients with professional services that meet the highest international standards.
Tonucci & Partners has offices in Tirana, Rome, Bucharest, Milan, Padua, Prato, Trieste, Naples and Foggia.
The law and consulting firm is ranked among the Top 100 law firms worldwide according to Forbes Italy.

References

Tonucci & Partners Albania was selected by the World Bank as exclusive legal advisor to the Albanian Government for the privatisation of major state-owned companies operating in strategic sectors, including oil and gas (Armo, Albpetrol), mining (Albchrome, Albaker) and telecommunications (AMC and Albtelecom).
The Firm has also actively contributed to the drafting of some of Albania’s most important laws, including the 1998 Constitution and the Albanian Customs Code.
The EU PHARE Commission and the Albanian Government selected Tonucci & Partners Albania as legal advisor and coordinator for reforms aimed at improving economic legislation in Albania.
The Firm supervised and coordinated a team of more than 50 international professionals specialised in nine different areas of law for the revision of existing economic legislation.
Tonucci & Partners Albania has also assisted the Italian Embassy in Albania, the European Commission Delegation in Albania and the OSCE in several legislative reform projects.

Clients and Services

Individuals, associations, small and medium-sized enterprises starting their international expansion journey, as well as large multinational companies, financial institutions, banks, government organisations and public bodies, rely on the Firm for legal assistance and professional consultancy regarding their activities in Albania and international transactions.

Tonucci & Partners Albania provides a broad range of legal services in commercial and corporate law, including:

company incorporation and shareholders’ agreements;
due diligence activities;
legal opinions;
mergers and acquisitions;
assistance in negotiations and drafting of contracts, including joint ventures and cooperation agreements;
energy and utilities;
natural resources;
environmental law;
antitrust;
telecommunications;
multimedia and information technology;
privacy and data protection;
real estate and construction;
intellectual property;
employment and immigration law;
tax law;
administrative law, particularly in public procurement and tenders;
civil law;
international law;
assistance with foreign investments in Albania and EU funds (IPA).

Tonucci & Partners Albania has consolidated experience in arbitration and litigation and is authorised to represent clients before all Albanian courts.

Active Member of International Business Organisations

Tonucci & Partners Albania is an active member of several international business organisations, including Confindustria Albania, the Italian Chamber of Commerce in Albania (C.C.I.A.), the Foreign Investors Association of Albania (F.I.A.A.), the American Chamber of Commerce in Albania (AM.CHAM) and the British Chamber of Commerce in Albania (ABCCI).

The FINTOKEN Act, a pioneering legislation that places Albania at the centre of international attention

By Mario Tonucci

I am pleased to present the opening of a new specialised desk established by Tonucci & Partners in a highly innovative field, following the approval by the Albanian Parliament of a pioneering legislative framework that places the country at the centre of international attention.
Among the recent legislative developments that deserve particular attention due to the investment and development opportunities they may create, both today and in the near future, the Law No. 66/2020 “On Financial Markets based on Distributed Ledger Technology” (the so-called “FINTOKEN Act”) certainly represents a significant milestone.
The main objective of the FINTOKEN Act is to create economic benefits for the country through the use of Distributed Ledger Technology (DLT), while ensuring maximum investor protection through clear and comprehensive rules.
In general terms, the new FINTOKEN Act regulates:

the issuance of digital tokens and/or virtual currencies;
the procedures and requirements for obtaining licences;
the monitoring and supervision of legal entities engaged in the distribution, trading and custody of digital tokens and/or virtual currencies;
the activities of Digital Token Agents;
the activities of Innovative Service Providers;
automated collective investment companies.

In particular, the FINTOKEN Act establishes the different types of licences required to operate within this sector and defines the powers of the authorities responsible for monitoring and supervising licensed legal entities.
The competent authorities identified by the law are the Albanian Financial Supervisory Authority (AFSA) and the National Agency for Information Society (NAIS).
The following licences are provided:

Digital Token Agent Licence

Issued by AFSA, this licence allows the provision of assistance and consultancy services related to financial aspects of digital assets.

Centralised and Decentralised Stock Exchange DLT Licence

Issued jointly by AFSA and NAIS, this licence allows companies to operate as DLT-based exchanges.
The licence is divided into three categories:
Category “A” – allows the trading of “digital service tokens”, “digital payment tokens” and/or “digital asset tokens”, according to the definitions provided by the FINTOKEN Act.
Category “B” – allows the trading of FIAT currencies and/or virtual values together with digital service, payment and asset tokens, in addition to the activities permitted under Category “A”.
Category “C” – allows the trading of “digital securities tokens”, in addition to the activities permitted under Category “B”.
Within centralised or decentralised DLT exchanges, depending on the specific technological security measures adopted, the activity of Margin Trading may also be carried out, as defined by the FINTOKEN Act.

Innovative Service Provider Licence

Issued by NAIS, this licence covers the provision of innovative services supporting investors, particularly regarding technological aspects.

Third-Party Portfolio Custodian Licence

Issued jointly by AFSA and NAIS.

Automated Collective Investment Company Licence

Issued by NAIS.

To obtain a licence under the FINTOKEN Act, an Albanian legal entity must be established as a joint-stock company, meet the minimum share capital requirements provided by the law and comply with both general and specific conditions related to the requested licence.
The licensing procedures must be completed within 60 calendar days from the submission of the application and the completion of the required supporting documentation, according to the provisions of the FINTOKEN Act.
Licences remain valid indefinitely from the date of approval by the competent authority, unless revoked or voluntarily renounced. A licence cannot be transferred to third parties without prior written approval from the relevant authority.
Among the general obligations imposed on licence holders, particular attention should be given to the obligation to pay annual fees to AFSA and NAIS according to their respective competencies.
Licence holders must also operate in compliance with anti-money laundering and counter-terrorism financing regulations and must adopt procedures aimed at preventing potential conflicts of interest.
Once licensed, the entity must be registered in the relevant public register in order to legally carry out its activities.

Digital Token Offerings: STO and ICO

Chapter IV of the FINTOKEN Act introduces specific rules for digital token and/or virtual currency offerings by issuers registered in Albania, creating the conditions for an alternative source of financing for new businesses, particularly companies that may face difficulties in raising capital through traditional financing methods.
The FINTOKEN Act regulates the following types of offerings:

Security Token Offerings (STO) – offerings of digital security tokens;
Initial Coin Offerings (ICO) – initial offerings of digital tokens and/or virtual currencies.

STOs with a total planned issuance value below €1 million are exempt from the obligation to publish a full prospectus.
For ICOs, the law requires the publication of an offering presentation document (Whitepaper) when the total planned issuance value exceeds €8 million.
The issuer, through the TD Agent, must submit an application to AFSA for authorisation of STO or ICO offerings. AFSA must respond within 60 days from the submission of the application.

Market Protection, Taxation and New Opportunities for Investors

The FINTOKEN Act introduces specific provisions aimed at preventing market abuse and unlawful conduct related to market manipulation.
In particular, the law establishes rules regarding:

- reporting obligations;
- the definition of “inside information” and the prohibition of trading based on privileged information;
- sanctions for the unlawful disclosure of inside information.

The sanctions provided by the law include financial penalties, administrative measures such as the suspension or revocation of licences, as well as the application of provisions contained in the Albanian Criminal Code or other national legislation in cases where violations constitute criminal offences.
Finally, the FINTOKEN Act expressly establishes that individuals and legal entities carrying out activities under this law are subject to the taxation system currently in force in the Republic of Albania.
In this regard, it should be noted that Albania offers a particularly competitive tax framework, with:

- - corporate profit tax up to 15%;
  - a reduced profit tax rate of 5% for software production and development activities;
  - capital income tax at 8%;
  - VAT at 20% (reduced to 6% in specific sectors).

International Interest in Albania’s FINTOKEN Act

A recent webinar organised by Tonucci & Partners focused on the opportunities created by this innovative legislation.
The event, entitled “New Investment Opportunities in Albania: Cryptocurrencies, Blockchain and Financial Markets in Light of the New FINTOKEN Act”, was held in October 2020 with the support of Confindustria Albania and in cooperation with the Embassy of Italy in Tirana and the Government of the Republic of Albania.
The webinar brought together a panel of leading international experts to discuss the impact of the new regulatory framework and the potential opportunities for investors and companies operating in the digital economy.
Considering the strong interest and the absolute innovation of the FINTOKEN Act at European level, Tonucci & Partners Albania immediately decided to make its specialised expertise available to interested operators through the creation of a dedicated Blockchain and Cryptocurrency Desk.
he Desk is led by Attorney Neritan Kallfa, assisted by Attorney Ervin Bano.
The team also benefits from the valuable collaboration of Prof. Attorney Alessandro Del Ninno and Attorney Massimo Simbula, internationally recognised experts in the fields of new technologies, electronic communications and data protection.
The Desk provides specialised legal assistance to companies, investors and institutions interested in exploring opportunities related to blockchain technologies, digital assets, cryptocurrencies and the regulatory framework introduced by the Albanian FINTOKEN Act.