Cryptocurrency in Lithuania

Lithuania is the largest Baltic country and is widely known for its financial center.

Thanks to a powerful thrift, the favorable business conditions

of this condition encourage foreign investors

to register a Lithuania cryptocurrency firm.

Development of the cryptocurrency market in Lithuania

The principal characteristic and distinguishing feature of the performance of crypto-exchange activities in Lithuania, in distinction to identical tools provided for in some EU countries, is the legislative opportunity of a notice process for receiving approval for a company to take out Cryptocurrency Licence in Lithuania, without the need to obtain a specialized license. In this case, the Lithuanian company requires submitting a notification in the form of an application for the kind of action that it is going to carry out (crypto exchange), connect a package of the essential documentation, and comply with the necessities of KYC and AML.

Lithuania has become a unique hub for fintech companies concentrated on global financial markets. Business-oriented regulatory manners and lower registration prices, licensing, and supervision of financial organizations make Lithuania appealing for extensive and global financial establishments, as well as fintech start-ups.

Regulation of cryptocurrencies in Lithuania

Lithuanian cryptocurrency regulationis quite difficult and separated between two major types, which vary depending on the privileges granted to issue Initial Coin Offerings (ICOS). There are two principal types:

Besides, tokens and ICOs in Lithuania that do not present managerial privileges and earnings are separated into two types according to the fundamental regulation of the regulation that governs them.

Therefore, there are ICOs and tokens that are developed only to grant the privilege to operate a product or assistance and are controlled by the Civil Code. In the identical type, there are ICOs and tokens that are operated as payment devices or those that are used for generous goals. Both types are controlled by the Anti-Money Laundering and Financial Fraud Act.

Nevertheless, all cryptocurrency regulations in all three classes will be taken out by the regulations noted previously, with the difference that the first category will preferably be controlled by the Civil Code, given its more straightforward character.

The Lithuanian cryptocurrency regulation for ICOs and tokens that present the right to manage, and profit is carried out by multiple lawful actions, relying on the specifics of the cryptocurrency:

ICOs and tokens created with the features of protection are governed by the Securities Act.
Crypto tokens that fall under the aspects of crowdfunding are controlled under the Crowdfunding Law.
ICOs and tokens that may be included in the category of financial tools will be controlled by the framework of the Law on Markets in Financial Instruments.

Cryptocurrency licenses in Lithuania

Lithuania has created almost ideal conditions for launching a fintech business. The Central Bank supports the growth of economic technologies and non-banking payment services. A favorable environment has been created for the development of fintech startups. The process for getting licenses was simplified. Over the past year, the number of fintech companies has increased by 40%, major international players are showing interest in the Lithuanian market.

Although Lithuania has not created a coherent legal framework for working with cryptocurrencies, it has nevertheless introduced licensing for companies involved in the exchange of cryptocurrencies and maintenance of wallets for storing cryptocurrencies. It has become one of the few states in the European Union that have a procedure for licensing and authorizing a new virtual currency.

To obtain Crypto License in Lithuania, you need to know about two possibilities.

Package:	BASIC	CUSTOMIZED	EXTENDED	FULL	READY-MADE
Services:	Assistance With company formation and FNTT registration	Individual procedural rules in accordance with business model + basic maintenance	Corporate account for operating activity and set of corp. documents	MLRO with local residence + employment and entire maintenance	MLRO with local residence + employment and entire maintenance
Set-up fee:	€ 2100	€ 4100	€ 5100	€ 6100	€ 9000
Maintenance fee: (monthly)	0€ / month	€35 / month	€85 / month	€895 / month	€895/ month

Cryptocurrency exchange license

It is the first of two Lithuania cryptocurrency licenses. The operator of the exchange of cryptographic currency for service providers of the coin exchange for fiat- a company or branch of an enterprise obtains the possibility to transform the cryptocurrency, accepting a charge. This is an official type license that wraps services for exchanging fiat for cryptographic currency, and vice versa. Besides, this license is given for the cryptocurrency trade operation.

Crypto wallet and custodian services license

It is the license for company registration in Lithuania needed for those who supply wallet services to store cryptocurrencies. The cryptographic wallet service provider generates encrypted keys for buyers who may operate the assistance to store, trade, and share virtual capital.

A firm may demand both licenses at once. They are regulated by the Lithuanian Financial Crimes Investigation Service (FIU). The application review period is around 1-2 months.

The procedure for obtaining a cryptocurrency license in Lithuania

To apply for a cryptocurrency exchange license or Crypto wallet and custodian services license, a limited liability company (UAB) should be based in Lithuania, which will supply cryptocurrency exchange or repository assistance. UAB is one of the considerable accustomed and famous structures of business in Lithuania. Registration can be done during a visit to Vilnius or completely remotely by proxy without the necessity to go to Lithuania.

Basic Steps to Obtaining a Cryptocurrency License

The following phases in the Cryptocurrency exchange license procedure include:

01/ Ensuring the existence of at least 1 shareholder and 1 director. There are no limitations on citizenship or place of living.

02/ Selection of at least 3 committee associates, not necessarily residents of that country.

03/ Maintaining a regional AML Compliance Officer, who must be a citizen of Lithuania.

04/ The minimum advised share capital is 2500 EUR.

05/ The committee associate who is going to be reliable for implementing AML approaches and procedures and the Compliance Officer who is liable for negotiations and news to the Financial Intelligence Unit must necessarily be individuals.

06/ Each shareholder and UBO must be authorized by the Investor Assessment Commission (IAC).

07/ Extending a bank account per B2B and C2B (for crypto-oriented activities) in a financial institution (takes approximately 2 weeks).

08/ The licensed firm should maintain a clear summary of all clients and trades by AML/KYC regulations.

Documentation for obtaining a license

Investors who need a license for Lithuanian cryptocurrency companies will need to provide the following:

valid passport of each founder of the company;
power of attorney (PoA);
extensive information about business models and licensed types;
resumes of all founders of the company, so that local institutions can get acquainted with the experience and capabilities of all individuals involved in the cryptocurrency industry;
the address of the website where the services will be offered;
a certificate of no criminal record from the criminal record (not older than 3 months) for the shareholder(s), member(s) of the board of directors, an ultimate beneficial owner(s), and compliance specialist.

All of the above documents must be notarized by a public notary, and an apostille in English will also be required. language. If these documents are submitted by the requirements, the regulator will start the procedure for issuing a license for the Lithuanian cryptocurrency. Considering that this is a complex procedure, our team of consultants is at your disposal for advice and legal support in obtaining a crypto license in Lithuania.

Internal security measures

Obtaining a cryptocurrency license entails preparing documentation of the company’s internal procedures to comply with the anti-money laundering (AML) and Know Your Customer (KYC) criteria set by the FCIS.

Internal security actions and risk assessment for cryptocurrency business

Defining the level of risk.
Risk category.
Transaction control procedures.
Source of funds.
Adherence monitoring and internal audit.
Owed persistence standards.
Information responsibilities.
Supply and repository of data about the transactions of the company and customers.
Fulfillment of the responsibility to inform the controller.
Company internal control rules.

AML/KYC Procedure Rules

Description of operations with lower risk and structure of corresponding conditions and policies for such operations.
Description of operations with a more elevated status of danger, including hazards associated with communications, customer location. Additional parameters and the establishment of relevant requirements and policies for guiding and observing operations.
Due diligence rules.
Client identification.
Confirmation of residential address.
Requirements and procedures for keeping data on trades and customers of the organization.
Regulatory notice requirements.

Cryptocurrency Taxation Rules in Lithuania

Virtual currency exchange services are not subject to VAT.
Cryptocurrency company’s gains are taxed at 15%. A micro firm with less than 10 workers and less than €300,000 in appalling annual revenue may be taxed at a decreased corporate taxation rate of 0-5%.
Income Tax (WHT) 15% is charged on dispersed gains.
The taxation of virtual currency transactions depends on the nature of the transactions. There is no direct tax if the token is sold or bought in a similar way to security, investment, or other currency.

Terms and cost of obtaining a Lithuanian cryptocurrency license

The submitted documents will be considered by the Central Bank of Lithuania no more than 3 months from the date of submission. The decision to issue a license to an electronic money institution will be made after consideration of the above documents within the same 3 months.
If any shortcomings are revealed in the documents, both in terms of the form of the document and in terms of their content, the regulatory authority will request the missing information or corrected forms by the requirements of the regulator. In this case, the consideration period (3 months) will be counted from the date when the documents were submitted.
The cost of registering a company is from 2640 EUR (depending on the chosen legal address, the number of company members, and the availability of remote registration).
Opening an account for making share capital from 750 EUR.
The cost of support for the organization of crypto-exchange activities from 3900 EUR

Conclusion

All entrepreneurs in Lithuania need to obtain a crypto license to conduct business in the provision of services related to cryptocurrency. Lithuania offers a friendly and fully regulated legal environment for companies offering cryptocurrency exchange services and storage wallets, with clarified rules that come into effect from 2020.

We offer effective solutions for registering a crypto company in Lithuania. For more information, please contact us so that we could create an individual offer for your project.

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