Crypto License in Lithuania

Requirements for the company

Companies of any service provided within the field of virtual currency activities should do the following:

• Implement customer due diligence and verification;
• Provide regulators with access to customer information;
• The company needs to have an internal control system and a procedure for risk assessment;
• Compliance with KYC/AML means there is a compliance officer
• A notification to be sent to the Financial Crime Investigation Service – FCIS.

There are also requirements that board members and owners of the company should not have any criminal records or reputations that may be questioned.

No physical presence is needed for crypto company owners and board members if foreigners/non-residents of Lithuania want to conduct crypto activities legally while being abroad.

It is necessary to submit the following documents when applying for a cryptocurrency license in Lithuania:

Advantages

Companies of any service provided within the field of virtual currency activities should do the following:

• Implement customer due diligence and verification;
• Provide regulators with access to customer information;
• The company needs to have an internal control system and a procedure for risk assessment;
• Compliance with KYC/AML means there is a compliance officer
• A notification to be sent to the Financial Crime Investigation Service – FCIS.

There are also requirements that board members and owners of the company should not have any criminal records or reputations that may be questioned.

No physical presence is needed for crypto company owners and board members if foreigners/non-residents of Lithuania want to conduct crypto activities legally while being abroad.

Documents needed

In order to review and prepare an application for a cryptocurrency license, the following documentation will be required:

• A valid passport copy from the country of origin
• In the case of a remote start-up and license application, a power of attorney (PoA) is required
• The business model of the company and a detailed description of its activities
• Crypto license participants’ CVs/summaries of experience and education
• Address of website that will offer cryptocurrency services
• A copy of the criminal record of an owner, board member, final beneficiary (UBO) or AML officer (not older than 3 months)

Example of a Lithuanian crypto company certificate

Field of activity – Depozitinių virtualiųjų valiutų piniginių operatorius, Virtualiųjų valiutų keityklos operatorius

Crypto company registration in Lithuania

Registration of a crypto company in Lithuania in 2024 is a very promising direction for those entrepreneurs who would like to deal with blockchain technology and digital assets. Lithuania appeals with its good regulatory climate, clearly tuned legislation, and openness to novelties. In this article, the key points relevant to the process of registering a cryptocurrency company in this country are presented: what requirements are imposed on the founders, how much authorized capital is required, and other important points.

Founder’s requirements

Any cryptocurrency company in Lithuania can be registered both by individuals and legal entities that must not necessarily be the country’s residents. Nevertheless, founders and managers of such companies are to have a perfect business reputation for successful passing the very license issuance procedure and satisfying all the requirements of local legislation. What is more, AML and KYC checks may be needed.

Amount of authorized capital

Minimum amount of authorized capital with the purpose to register a cryptocurrency company in Lithuania is EUR 125,000. Note that such funds are supposed to be deposited into the account of the company before the latter starts its activity. This capital can be spent on covering start-up costs and investing in business development.

Licensing of cryptocurrency activities

To provide such activities in Lithuania, the undertaking is obliged to obtain the relevant license issued by the Lithuanian Anti-Money Laundering Centre. There are mainly two types of licenses:

• License for Cryptocurrency Exchange: A license to entitle an undertaking to exchange cryptocurrencies for fiat money and vice versa; also, exchange cryptocurrencies for a cryptocurrency.
• License for Cryptocurrency Wallets: Such a license allows an undertaking to store and manage keys to the Cryptocurrencies on behalf of a client.

Application form and a set of documents confirming the conformity of the company with Lithuanian legislation, including AML/KYC requirements.

Tax regulation

General regulation of taxation applies to cryptocurrency companies in Lithuania. The corporate income tax is at a rate of 15 per cent with a reduced rate of 0-5 per cent in the case of small businesses whose annual revenues are less than 300,000 euros. VAT and other tax aspects have to be considered while transacting with cryptocurrency.

By registering a cryptocurrency company in Lithuania, one opens unparalleled opportunities to break into the European digital asset market. The country allows an attractive regulative and tax environment for crypto businesses; however, success in this area requires plans to be made with due care and in compliance with all legal and regulative requirements in the country. Businessmen are encouraged to examine these areas with local lawyers and financiers to ensure complete compliance and optimize their operations in Lithuania.

Crypto exchange license in Lithuania

A crypto exchange license in Lithuania allows a company to work in various fields of activity with digital assets and offer extensive services related to cryptocurrencies. Lithuania, due to its progressive regulatory policy and openness to innovation, attracts many entrepreneurs who would like to conduct business with cryptocurrencies for the European market. In this post, let’s look at the main points of getting a crypto exchange license in Lithuania, what services are provided to a company with such a license, the reporting requirements, and the benefits of it.

Services that a crypto exchange licence holder can offer

A company that has obtained a crypto exchange license from Lithuania can offer a wide range of services, which include:

• Trading pairs: Exchanging one cryptocurrency for fiat money or other cryptocurrency.
• Custodial services: For the safekeeping of clients’ cryptocurrency assets, highly secure.
• ICO/STO: The organization and performance of initial coin offering or tokenized securities for companies.
• Providing APIs to developers: Providing APIs for integration with other services and applications.

Work with Clients

Having the license of a crypto exchange, the company will be entitled to operate with both private investors and corporate clients to provide them with access to the trading platform for such assets, as well as additional services associated with investments in digital assets. The big work with the clients is the observance of AML and KYC compliance; hence, detailed identification and verification of clients are needed.

Reporting requirements

Companies operating with cryptocurrencies under an in-possession cryptocurrency exchange licence are obliged to comply with reporting requirements of the regulator, including reporting related to financial transactions, management reports, and also AML/KYC activity. The requirements ensure the transparency of operations of a company, together with protection of interests of clients.

Benefits of crypto exchange licence in Lithuania

• Regulatory clarity: Lithuania offers a clear and understandable regulatory environment for cryptocurrency companies that minimize legal risks.
• Access to the European market: Under this license, the company gets access to the wider market in the European Union.
• Prestige and credibility: With a license, the confidence of clients and partners would increase and add more weight to the reputation of the company internationally.
• Growth and scale: Licensed operations allow the company to expand its services and attract more clients.

The license of a crypto exchange in Lithuania requires an extended approach to the preparation of documentation, meeting regulatory requirements, and assuring high standards of security and transparency of operations. Benefits accompanying this process will counterbalance all the challenges related to the licensing process, hence this is an important step towards successful development in the cryptocurrency and blockchain industry. Following the right approach and fulfilling all the requirements, the company would not only be able to get a foothold in the market but also considerably expand its capabilities and scope of activities.

How to obtain a crypto trading license in Lithuania?

Over the last couple of years, Lithuania became one of the most attractive jurisdictions for cryptocurrency companies because of its innovative regulatory policy and openness towards financial technology. That means that the transparency of the process of receiving a cryptocurrency trading license in this country and relative simplicity make Lithuania an extremely favourable place for start-ups and international companies seeking to develop their operations within the European Union. In this article, we review the step-by-step process of obtaining the relevant license in detail, requirements to founders, and the time frame for setting up the company.

Step 1. Preparatory phase

First, it would be required to consider in detail the regulatory requirements of Lithuania regarding cryptocurrency companies. It means it is necessary to be acknowledged with legislation, which regulates cryptocurrency activities, AML, and requirements for KYC procedures.

Step 2. Registration of a legal entity

A registered legal entity in Lithuania is a prerequisite for getting the license. The procedure involves choosing the company’s name, legal address, elaborating on the articles of association, and registration in the Lithuanian Register of Legal Entities.

Step 3. Preparation and submitting the documents

At this stage, the company should prepare and send to the Lithuanian Securities Market Commission a package of documents that prove compliance with regulatory requirements. Among them are the main ones:

Business plan, which describes the business model, sources of revenues, and structure of management; AML and KYC policy, proving the measures against money laundering and terrorist financing.
Evidence of professional suitability of founders and key personnel, which should provide biographies and documents confirming experience in the financial sector.

Step 4. To wait for the regulator’s decision

After the submission of all required documents, the Lithuanian Securities Market Commission will review them. This process may take from several weeks to several months, depending on how complete and qualitative the submitted documentation was.

Requirements to founders

Business reputation: The founders and key employees shall have a flawless business reputation and not have any criminal records, especially those about financial crimes.
Financial strength: It has to be proven that the company has adequate capital for starting and maintaining the activity.
Professional Experience: It is a must that previous experience in finance is held, as well as an understanding of the cryptocurrency market.

Timing of Company Incorporation

The general procedure of preparation of documents to getting a license takes from 1 to 6 months, depending on the complexity of the documentation and the speed of consideration of the application by the regulator.

Obtaining a cryptocurrency trading license in Lithuania is a very promising opportunity for companies willing to work in the European market. The probability of getting a license increases if the company follows the steps and requirements stated above. The process is worth going through with full responsibility and paying much attention to details, because qualitative preparation and completeness of documentation play a key role in a positive decision by the regulator.

Securing Your Gateway to Europe: The Crypto Exchange License in Lithuania 2024

While the rise of the cryptocurrency industry booms all over the world, Lithuania as a country has emerged to become the gateway to the vast European market for crypto businesses. This article is a full guide on how to get a crypto exchange license in Lithuania. It covers everything from the beneficial regulatory climate of the country to the general procedure of licensing to the strategic advantages that Lithuania will accord your crypto business as its base.

Crypto Licensing Framework in Lithuania

The governments in Lithuania, through the Bank of Lithuania, have created a very progressive regulatory environment for digital currencies with an underlying framework of EU financial regulations. There are several options for crypto licenses, depending on what aspect of the cryptocurrency business:

• Crypto exchange license in Lithuania: Crypto-to-fiat and crypto-to-crypto exchange services can be provided.
• Crypto broker license in Lithuania: Brokerage of crypto transactions can be operated.
• Crypto-trading license in Lithuania: For those businesses which directly deal in crypto trading activities.
• VASP crypto license in Lithuania: In case of Virtual Asset Service Providers, it encompasses a wide array of services from wallet providers to the issuance of ICOs.

Crypto-licensing Eligibility and Requirements

This means that, in order to get a license, an applicant has to meet high demands regarding effective AML/KYC procedures, proof of operational capability, and a clear business plan. One more highly important demand is to show strong IT security from cyber threats.

Cost Analysis for Obtaining Crypto License in Lithuania

The crypto exchange license cost in Lithuania is competitive when compared to other EU countries, and the licensing process is relatively straightforward; thus, Lithuania is an economically attractive jurisdiction for crypto businesses.

Advantages of a Crypto License in Lithuania

Obtaining a crypto license in Lithuania has a number of key benefits for companies, such as access to the entire EU market under regulatory compliance, increased credibility, and potentially great growth and scalability.

Investment Opportunities in the Crypto Market of Lithuania

Lithuania is accessible not only due to its regulatory but also economic environment-it provides potentially lower operational costs. Accessibility to the cheapest crypto license in Lithuania makes it a destination for both startups and established firms willing to maximize their investment efficiency.

How to Manage a Sale and Transfer of Crypto License

One can also accelerate market entry by acquiring an existing crypto exchange license presently on sale in Lithuania. In any case, due diligence and a proper understanding of the legal frameworks involved are necessary pre-transaction requirements.

Conclusion: Lithuania has all the ingredients to make any crypto business wish to establish or extend its operations in Europe. From a friendly regulatory regime to competitive costs and strategic market access, a crypto exchange license in Lithuania is one sure step toward a vantage position within the global crypto economy.

As of 24.10.2024, there are 640 entities in Lithuania that have been granted permission to provide crypto services: cryptocurrency storage service and cryptocurrency exchange service.
It follows the table of Crypto-licences distribution in Lithuania, divided by year:

Obtaining a crypto license in Lithuania by year

Crypto license in Lithuania 2025

Improved requirements for operators of the Virtual Currency Exchange Platforms and operators of Virtual Currency Depository Wallets confirm their equity capital. While still under new regulation, there is a prescription that those operators shall check their capital level in order for them to be assured of their compliance with the requirements prescribed by regular reviews. This is not only in ensuring the operators are financially stable, thus reliable, but also secures the interest of their customers. The measures aimed at strengthening user confidence in the institutional participants of the virtual currency market increase the transparency of their activities.

Operators shall provide appropriate documentary evidence of own funds sufficient to cover any shortfall in the level of required own funds within the time limits laid down by the regulator. Failure to observe the requirements above may be subject to administrative penalties, including fines and restrictions on further activity.

On 1 August 2024, amendments to Article 25(6) of the Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing regarding the requirements for legal entities registered in the Republic of Lithuania that operate or intend to operate as virtual currency exchange operators and/or virtual currency deposit wallet operators came into effect. Following amendments are binding on such a legal entity to:

• If the legal person is registered in the form of a joint stock company or a closed joint stock company:
  • a) register and fully pay capital at least in the amount of EUR 125,000 and to maintain permanent capital at the aforementioned amount;
  • b) ensure that the funds making up the authorized capital are transferred to an account with a credit institution of the Republic of Lithuania or to an account with a credit institution of the European Union Member State that has a branch in the Republic of Lithuania.

For legal entities of other legal forms, established in the Republic of Lithuania, as well as branches of legal entities of the European Union Member States or foreign countries:

• A guarantee document should be provided to cover the entire period of activity in the amount of at least EUR 100,000 for one customer’s claim for damages and for the amount of EUR 500,000 for all customers’ claims for damages per year, issued by an insurance company or a financial institution.

These changes seek to enhance the control over the activities of Virtual Currency Operators and strengthen their level of financial responsibility toward their customers in general, thus helping in efforts to combat money laundering and the financing of terrorism.

The novelty brought amendments to the Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing; an obligation active was imposed on natural persons who acted as operators of virtual currency exchange and/or operators of virtual currency deposit wallets. The innovation, on the one hand, requires such persons who have initiated their activities before 31 July 2024 and who continue to practice from 1 August 2024, to declare to the relevant authority prior to 31 August 2024 that as of 1 August of the same year they satisfy the statutory equity capital requirement, which should amount to at least EUR 125,000.

In particular in this regard, natural persons have to provide the competent authority with proof of statutory equity capital. Such proof has to be furnished in a form as provided for by the authority in such a way as to be able to verify the adequacy of one’s financial resources and, consequently, the statutory requirements concerning financial reliability and stability.

The latter serves to enhance financial transparency and accountability of VC operators, adding to the protection of the rights of consumers and hindering financial risks within the system of AML/CFT.

Under the Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing, each legal entity that acts as a virtual currency operator is obliged to identify by themselves and submit to the Authority those documents that duly prove that the company meets legal requirements. This is explained by the fact that the law does not provide for a clearly defined list of such documents.

Among the documents most relevant to prove compliance with the legal requirement of having equity capital of at least EUR 125,000 are the following:

• interim reports of the financial statements for the first half of the financial year 2024 that have been registered at VM Registration Centre;
• extracts from the General Ledger entries current on or after 30 June 2024, taken out from the accounting software used by a bank;
• monthly cash inventory report of the company for June-July 2024.

A bank statement confirming that the cash balance as at 1 August 2024 is at least €125,000.

Legal entities should also note that the submission to the Office of solely financial statements or evidence of the formation of the company’s authorised capital of €125,000 cannot be considered as sufficient proof that the legal requirements are met.

Attention should be drawn to the fact that virtual currency operators who, by 31 August 2024, do not provide sufficient proof that, as of 1 August 2024, they maintain equity capital continuously in the sum laid down shall be deprived of a right to further continue their activity within the Republic of Lithuania as of 1 September 2024. Emphasis is placed on the stringency of legal requirements and the need for strict compliance to ensure legality in the course of virtual currency activity.

The Lithuanian government feels the risks associated with crypto-assets are rising and has thus been strengthening the regulatory positions of companies operating within this area in the country. The chiefs of the Bank of Lithuania, Ministries of Interior and Finance, along with FCIS, categorically insist on the tightening of control over cryptocurrency-related activities, pointing out that without relevant measures the country will face its reputation as a reliable and stable jurisdiction being lost. Such a move might have very negative consequences for the national financial system, investment attractiveness, and international position of Lithuanian fintech companies.

This will strengthen the regulatory requirements for a highly transparent and secure cryptoasset market and this, in turn, could contribute to increasing confidence in the Lithuanian financial system, domestic and foreign investors alike. It will also reduce the risks related to money laundering and the financing of terrorism, strengthening Lithuania’s position internationally as a country that meets high standards of financial security.

While crypto-asset activities are innovative, they can be related to such risks as money laundering and fraudulent schemes. The Bank of Lithuania regularly informs consumers, financial market participants, and institutions of control about such risks, pointing to the necessity of strengthening controls in this sphere.

Due to the threats identified, Lithuania plans further strengthening of the legal regulation of the crypto-asset market. With active participation of experts in this field and submission of legislative proposals, specific measures are to be developed and implemented, which will make the legal environment more strict and supervise providers of crypto-asset services.

More strict regulation will, in turn, enable financial institutions to better detect transactions that may be suspicious of money laundering and terrorist financing. More detail in the information provided to the FNTT will facilitate rapid responses and investigations that, again, will help prevent further offenses. The success of the measures proposed below depends to a large extent on the close co-operation and co-ordination of all the supervisory bodies.

The Ministry of Finance of Lithuania has prepared several legislative amendments and submitted them for co-ordination with other state institutions in advance of the relevant European Cryptoasset Markets Regulation requirements coming into force in 2025: The aim of these amendments is to introduce new operational requirements for cryptoasset service providers and to secure a much higher level of licensing.

The proposed changes are intended to create an enabling environment for the sustainable development of the cryptocurrency sector through the incorporation of such into the country-wide fintech ecosystem. The measures are also expected to increase transparency of operations and set higher quality standards in this area. It will help clean up the market and underline companies with sustainable business models, which will be able to work in the new environment without substantial difficulties. The inability of some players to meet the requirements may mean that they have to review their operations or leave the market altogether.

Such an approach not only works for financial stability but also protects consumers’ interests and reduces probable financial losses and fraud connected with cryptoassets. It will further strengthen the position of Lithuania as one of the leading fintech innovation hubs in the EU.

After last year’s and this year’s inspections carried out against virtual currency operators, competent authorities imposed fines on twelve companies. These ranged from 2,700-220,000 euro fines, and warnings were given to two other companies. In 2023, the total amount of fines imposed for violations under the AML Law reached almost half a million euros. Such statistics show that some companies in the virtual currency sector continue to neglect the mandatory measures for preventing money laundering, which shows further and stronger regulatory measures with respect to that.

It also corroborates the status quo regarding regulatory compliance and the need for operators of virtual currencies to put in place an effective system of internal controls enabling them to forestall financial crimes. This involves fines, and the need to increase education and guidance of companies about compliance issues. Stability of this sector and control of the built-up risks remain in the focus of regulators.

Over the last years, Lithuania has become one of the most active centres of cryptoasset sector development within the European Union. Growth dynamics of the number of cryptoasset companies have noticeably increased: while in 2020 there were just 9, by the end of 2022 their number reached as many as 850. Considering, however, that the risks are growing, the Bank of Lithuania, the Ministry of Finance, and the Financial Service for Combating Economic Crimes decided to tighten the legislative framework. As such, certain amendments were made in 2022 to the Law on Prevention of Money Laundering and Terrorist Financing.

Due to these changes, as early as the beginning of 2023, the number decreased to 200. However, after the market got accustomed to the new conditions, the number began growing and constitutes 540 companies now. By the number of registered companies in the field of virtual currency, Lithuania holds second place in the EU, leaving behind only Poland.

However, the practice demonstrates that the cryptoasset market of Lithuania still has considerable challenges on the road to maturity and full compliance with the regulatory requirements. That is particularly true in regard to the reluctance of companies to report suspicious money transactions to the FSTT; it underlines the necessity to continue tightening controls and increasing the responsibility of market participants.

The findings also indicate further strengthening of regulatory measures and controls to ensure the stability and transparency of the cryptoasset market, the building of confidence in the use of cryptoassets among the general public, and protection of the financial system against money laundering and terrorist financing risks.

The Government of the Republic of Lithuania is taking a further active step in tightening the regulation in the crypto-asset market, with a view to reducing the risks of money laundering, terrorist financing, and fraud, as well as circumvention of international sanctions. The Government adopted a new package of measures that have been jointly drafted by the Bank of Lithuania in cooperation with the Ministry of the Interior, the Ministry of Finance, and other ministries. These include further strengthening the control over cryptoasset service providers and a further widening of FSTT’s powers.

Regulation in this area is only going to get tougher, while inter-institutional co-operation and information sharing will be further developed to enhance the effectiveness of controls.

The next section refers to how MiCA, the pan-European in-force market implementation regulation, would take effect on 30 December, with a transition period until 1 July 2026, allowing the adaptation of the market and the service providers to the new requirements. However, bearing in mind the high risks of the cryptoasset market, Lithuania has decided not to apply this transition period and thus to start implementing the requirements of MiCA from 2024 onwards. The decision underlines the country’s desire to adjust its national legislation to European standards as soon as possible, and to enhance the security measures in the cryptoasset market.

This will provide the position of Lithuania as a leader in the regulation of cryptoassets within Europe and protect the financial market from possible threats and build confidence in this rapidly growing sector.

This change in the regulation of cryptoassets is a serious step toward strengthening the financial security and consumer protection at the level of the whole European Union. The introduction of uniform requirements for the licensing and supervision of providers of cryptoasset services means that this fast-growing sector will fall under much stricter control.

Entrusted with the task of licensing participants in the cryptoasset market, the Bank of Lithuania, together with the Financial Service for Combating Economic Crimes, will observe the observance of requirements laid down by laws related in particular to anti-money laundering and combating terrorist financing. In this respect, the relevant approach highlights the need to reinforce security measures and improve the quality of services, a relevant element in the granting of a licence.

In turn, only those companies that demonstrate strict compliance with these requirements and secure a high quality in the provision of their services will be enabled to qualify for a license. The approach will therefore serve not only to improve the level of consumer protection and strengthen the integration of cryptoassets into the financial system but also to increase confidence in the cryptocurrency sector as a whole. It further reduces the risks of potential usage of cryptoassets in illegal transactions according to the arrangement of combating financial crimes.

The Bank of Lithuania actively participates in the process of informing and preparing legal entities that operate or intend to operate in the provision of cryptoasset services for the entry into force of the Markets in Cryptoassets Regulation of the European Union (hereinafter – MiCA). In this respect, the Bank of Lithuania has published a letter via which it has stated the main expectations and requirements for companies in advance regarding the implementation of MiCA.

In its letter, the Bank of Lithuania points to the following:

• It is necessary that legal persons take note of the content of MiCA and start implementing its requirements, especially those concerning licensing, operational security, consumer protection, and anti-money laundering measures.
• Pre-implementation preparation: Companies should not waste any more time and start pre-implementation preparation, in order to ensure that complete and full implementation of the regulation is done from the date of formal implementation thereof. Auditing on internal policies and updating of risk management systems should be initiated, and investment in training of staff should be done for the same purpose.
• Active collaboration with regulators means the Bank of Lithuania believes in active participation by companies in respect to regulators and will provide wide scope for transparency, hence prompt resolution of emerging issues.

This letter is part of a wider effort undertaken by the Bank of Lithuania in pursuit of stability and security of the financial system within the context of a rapidly developing cryptoasset market. In this respect, the Bank of Lithuania seeks to bolster confidence among all the stakeholders that Lithuania will further remain an attractive and reliable jurisdiction for innovation in the financial sector, one that actively implements European best practices.

The cryptoasset market of the European Union will move to a whole new level when the MiCA Regulation comes into full force on 30 December 2024. This turns it into a sector which is regulated and supervised as a fully-fledged part of the financial market, including the introduction of licensing for all its participants.

Key aspects of regulation under MiCA:

• Licensing: The licensing of all crypto-asset service providers ensures their compliance to be in operation.
• Governance and transparency: The MiCA regulation puts high measures of governance on firms, including the protection of clients’ assets, conflict-of-interest policies.
• Preparing for change: Companies will be required to take steps to adapt their operations to the new requirements; this includes reviewing and enhancing internal rules and procedures.

The Bank of Lithuania, in its letter, points out that despite the higher regulation, the risks of money laundering, terrorist financing, fraud, and other crimes remain high. For that reason, preparation by cryptoasset service providers is deemed essential in view of the entry into force of the new regulations by actively working to enhance their risk management and control systems.

The Bank of Lithuania calls on service providers to be more active in teamwork with regulators and to participate in education and raising-awareness programs in order to get a full understanding of all issues related to the new regulation. Only this way will cryptoasset transactions become even more secure, and that would contribute to building confidence in the sector-not only within Lithuania but throughout the European Union.

The Bank of Lithuania is very outspoken about what it expects from applicants who will provide crypto-asset services to show maturity and competence in managing the risks associated with this type of activity. This is a welldeserved expectation that allows only those operators who can guarantee a high level of security and reliability in their operations to enter the market.

Main criteria to be considered by the Bank of Lithuania while licensing:

• Shareholder structure and reputation: In this case, the review will cover the ownership structure of shareholders and their repute to ensure they are financially sound and reliable.
• Fumus originis-or the transparency of the source of funds: The Bank of Lithuania will need assurance regarding the purity of source of capital being invested for financing the activities to block illegalities in attracting investments.
• Qualification and reputation of managers: A great deal of importance will be attached to professional qualities and personal reputation of managerial personnel.
• Sustainability of operations: Applicants will be expected to demonstrate how they can ensure the sustainability, safety, and soundness of the operation of systems, including the existence of an effective internal control system and risk management systems.
• Independence of operation: It is relevant that the applicant is not a shell entity and does not outsource significant parts of its operation, and its control functions are outsourced to third parties that cannot ensure an adequate level of control.

These measures will contribute to mitigating risks linked to crypto-assets and increasing confidence in the sector as a whole. This letter also expresses the concern of the Bank of Lithuania regarding compliance with the said requirements, pointing out that compliance will be treated as one of the priorities when granting a right to operate in this sphere.

Bank of Lithuania — the new regulator of Lithuanian crypto companies

As of 1 January 2025, Bank of Lithuania will be the regulator of Lithuanian crypto companies.

Bank of Lithuania has published information with regard to applications for new and existing MiCA licences by January 2025:

• The disclosure requirement and a plan, which shall be in line with the GAP analysis, shall be included in a very specific and personalized whitepaper by all VASP companies registered in Lithuania. The Bank of Lithuania shall elaborate in detail on VASP companies’ compliance with CASP standards in line with DORA regulations.
• The update of ICT risk management, incident reporting, resilience testing, third-party management, and so on is to be performed according to corporate documents, and it should satisfy the requirements of the Bank of Lithuani.
• Any crypto asset, as well as any transfer of money in FIAT, is implemented with the use of a ‘move rule’ in order to follow all protocols present for any crypto transaction.
  The enterprise-wide risk assessment should also be at a new level, supplemented by the updated NRA-based methodology. The changes in the ANK-and financial-policies and audits against Bank of Lithuania requirements are also called for.
• The Bank of Lithuania stands ready to attract to its market only such crypto-asset providers that would have extensive experience. Candidates need to perform profound research on what the legal requirements and expectations of the Bank of Lithuania are, publicly available in advance and prior to filing applications for licensing. Their operations must be compliant with the highest standards.
• The activity of crypto-asset service providers is covered by the Markets in Crypto-asset Regulation of the European Union; it prescribes that shareholders and managers must be of good repute, possess adequate financial resources, and have an appropriate management organization that is experienced and competent. This will be a focus of attention in the licensing process.
• This would include, for investments in cryptoasset sector activities, proof of the origin of the funds with which such an activity is to be financed, including documentation of the investor’s business history and financial scheme. It will also be important that the management structure of complex groups of companies be described as clearly as possible, and where necessary, this structure be simplified with a view to ensuring transparency and credibility.

The Bank of Lithuania will carefully scrutinize the preparedness of candidates in the cryptoasset market for activity in a safe and secure manner, which means not only profound knowledge of the legal framework but also actual skills in risk management. Service providers will be obliged to provide clear proof that their activities will be stable and effective.
The Bank of Lithuania shall not issue licences to one-day companies, those that fail to provide the requested information or provide incomplete and/or inaccurate information. It is recommended that service providers already operating in the market apply for licensing only after thorough self-assessment for compliance with the requirements as well as assessment of the realistic possibility of obtaining a licence. It also brings to the forefront how licensed participants should, at all times during their operations, strictly comply with the established regulations.