Eternity Law International News Crypto license in Lithuania 2023

Crypto license in Lithuania 2023

February 18, 2022

Currently, Lithuania is one of the most sought-after EU jurisdictions for obtaining a VASP license to run a cryptocurrency exchange or other crypto-related project with clear and simple AML/CFT regulations. Eternity Law International offers ready-made solutions and professional support in the remote acquisition of a crypto exchange Lithuania license with a complete solution within several weeks.

Our company has been specializing in the licensing, consulting, and legal support of crypto businesses in the EU since 2017. In addition to building and executing effective algorithms for communication with the regulator, we have also established strong relations with numerous partners from around the world, including payment systems, virtual currency exchanges, and specialized services.

Obtain a crypto license in Lithuania for your blockchain start-up with Eternity Law International just in a few weeks!

The legal system in Lithuania permits corporate entities to get crypto licenses. Regulation in terms of crypto assets in Lithuania is sufficiently flexible to make it an attractive option where the objective is to operate a crypto business legally in European Union.

There are two options: to register a new legal entity or to buy a ready-made company with crypto authorization. 

The expected expense for full setup at a glance:

  • Obtaining a license: from 8,000€;
  • Acquiring a ready-made company: prices available on request (subject to each individual offer).

Please get in touch with us for a detailed explanation of what’s included in our packages and what are the requirements. However, if a ready-made company is not what you’re looking for – keep reading to find out the other option of registering a brand-new company in Lithuania and obtaining a license from scratch.

Crypto license in Lithuania: advantages of jurisdiction

The Lithuanian jurisdiction has favorable conditions for the formation of a Fintech company. The Central Bank provides comprehensive support in the development of Fintech and non-banking services for making payments. In addition, the country supports crypto startups and broadly promotes their development. Compared to neighboring Estonia, Lithuanian regulation of cryptocurrencies can be seen as more flexible.

Cryptocurrency regulation in Lithuania: fundamental laws

The laws governing the crypto industry in Lithuania are divided into two main groups, and they differ depending on the permissions granted to launch Initial Coin Offerings (ICOs). There are two major groups:

  • ICOs or tokens that do not grant management or profit rights; and
  • ICOs or tokens that grant both the right to manage and the right to receive profit.

Additionally, tokens and ICOs in Lithuania that do not offer managerial rights and profits are split into two categories according to the basic principle of law that regulates them. Hence, some ICOs and tokens are made specifically for the aim of conferring the right to use a good or service, and thus are subject to Civil Code regulation. ICOs and tokens that are used as payment methods or for charitable purposes fall under the same category. The Financial Fraud and Anti-Money Laundering Act explicitly regulates both categories. All categories of virtual currency regulation will, however, be carried out under the legislation already mentioned, with the exception that the first category will first be controlled following the Civil Code because of its simpler nature.

Depending on the characteristics of the token, a variety of legal acts regulate how ICOs and tokens that grant the ability to manage and profit are regulated in Lithuania:

  • The Securities Act governs initial coin offerings (ICOs) and tokens made with characteristics of securities, whereas the Crowdfunding Law governs crypto tokens that have features of crowdfunding.
  • The legislative framework of the Law on Markets in Financial Instruments will be used to regulate ICOs and tokens that may fall under the category of financial instruments.

FCIS as Lithuanian supervisory body for VASPs

The Financial Crime Investigation Service (FCIS, also known as Finansini nusikaltim tyrimo tarnyba or FNTT), a law enforcement agency under the Ministry of the Interior and a member of the global network of FIUs, supervises activities involving digital assets. The FCIS works to stop the funding of terrorism, laundering of illegally-gained proceeds, and sanctions infringements. The Lithuanian FIU is in charge of looking into cases of financial crime, particularly those involving laundering of dirty money, tax fraud (including VAT fraud), and the unauthorized use of EU funds. FCIS actively participates in the National Crime Prevention and Combating Corruption Program and is always coming up with new strategies to include society in the fight against financial crime. This authority frequently provides orders outlining specific provisions of AML/CTF law that directly affect the relevant required entities.

FCIS typically supervises crypto companies through targeted examinations that are organized a year in advance. At the beginning of the year, FCIS publishes a list of the companies that are being monitored, but unexpected targeted monitoring is also possible in some situations.

Additionally, regular reporting for VASPs was introduced by FCIS in 2023. This reporting must be done yearly. Such a strategy will undoubtedly alter the market’s transparency and enable the use of more efficient supervision techniques.

crypto exchange lithuania

Permitted activities for Lithuanian VASPs in frame of Lithuania crypto exchange license

Under the regulatory framework, virtual asset service providers are permitted to offer the following types of services:

  • Tokens/fiat storage and exchange: The VASP license enables its operator to keep digital assets on behalf of their clients using custodian wallets. As a down payment for services, VASP may take fiat money (often convert it to cryptocurrencies). This prepayment in fiat money may appear as a “balance in fiat currencies” in the client’s account. Even though the VASP license forbids the custody of fiat money, the operator may keep the prepayment for an unlimited time; however, it must ultimately be converted to tokens.
  • Exchanging tokens to tokens/fiat: businesses are permitted to provide exchange services between various virtual asset kinds. However, the trading of security tokens is prohibited because it calls for a separate investment firm license. A crypto license in Lithuania entitles the holder to provide services for exchanging tokens for fiat money and vice versa, enabling customers to purchase or sell tokens for the USD, EUR, etc.
  • Informational services:  VASP can store client’s information and inform on balances, transactions in addition to managing and protecting client coin depository wallets.
  • Acting as an intermediary in transactions: As an intermediary, VASP might provide services for transferring cryptocurrency from the client’s wallet to a wallet they specify in their order. This service acts as a cryptocurrency substitute for wire transactions using fiat money.
  • ICO: The VASP can also run initial coin offerings (ICOs), in which a first-time offer to purchase a cryptocurrency is made via the VASP. It is significant to note that the VASP corporation is only permitted to issue utility tokens as part of an ICO.

Lithuania crypto license requirements

To become an authorized VASP and get a crypto exchange Lithuania license, you must set up an LLC (UAB) to provide crypto exchange or storage services. An equity capital in the amount of 125,000 EUR will be necessitated starting on November 1, 2022 (after the Lithuanian AML Law amendment in 2022 June 30 No. XIV-1374), for entrepreneurs intending to launch a crypto project in Lithuania, under the new legislation. In addition, the new law mandates the formation of a register of crypto companies and the obligation for employing AML officers. The legal structure of UAB permits the operation of custody wallet operators’ businesses as well as crypto exchanges.

Another requirement, such as reporting to FCIS (including mandatory reports based on transaction value) and keeping records with client data consists of:

  • Implementing a risk-based approach in the course of licensed activity;
  • Reporting suspicious transactions and certain operations;
  • Fulfilling international sanctions regimes;
  • Identifying customers and storing their data;
  • Having policies in place to prevent illicit money circulation and terrorist funding;
  • Fulfilling other obligations arising from applicable law.

Since Lithuanian VASPs are not required to have a local director, a foreigner can guarantee secure control over the VASP’s activity.

Obtain a Cryptocurrency License in Lithuania: procedure overview

Generally, the company will be registered as a virtual asset service provider and get a crypto license in Lithuania after 3–4 weeks, and it will take an additional 2-3 weeks for it to become fully operational and create a bank account.

1. PRELIMINARY PROJECT ASSESSMENTGathering a preliminary set of the client’s documents:A current copy of the client’s passportAn overview of the company’s business strategy (up to two A4 pages)Completed customer profiles and addresses for each participant collectedThe budget and scope of the project are approved in accordance with the initial workshopThe operational department of Eternity Law International creates a POA and communicates it with the client along with the next steps1-2 days
2. REGISTRATION PROCESSRegistration of a company as the Virtual Asset Service Provider includes the following steps:Assistance with opening a start-up account for the establishment of the authorized capital of 125,000 EUR is providedThe sworn translation of documentation into the Lithuanian language is conductedDrafting Articles of Association and other supplemental documents in accordance with the Client’s firm corporate structureArranging and carrying out the notary dealTransfer of share capital in the amount of 125,000 EUR to a bank accountAfter being processed and transferred to the commercial registry, the documents are then entered into the registryAfter one week, the company entry appears in the commercial registerModification of the Articles of Association to reflect the increased share capitalSubmitting a special JAR form to the commercial registration accompanied with a beneficiary list to register a business under the commercial code of activity as a provider of virtual assets (this action is completed concurrently with the share capital increase)Ordering a set of corporate documents (Registry card, articles of association, shareholder list) in Lithuanian from the commercial registry in electronic formCorporate document notarization and apostilleFollowing that, it takes another two weeks to set up the infrastructure, write new policies, and look for a physical office.3-4 weeks
3. LICENSING PROCESSObtaining authorizations for conducting the operating activity within the legal framework of Lithuania:The client will be given a set of 30–40 questions (to find out about risk tolerance, customer location, business nature, etc.).Incorporating the solutions into the primary collection of documents (customer due diligence adaptation, sanctions implementation, data collection and storage, verification standards, etc.).Searching for premises for rent and concluding a lease agreementAssistance in selecting a KYC/KYT provider that complies with Lithuanian AML regulations, legal support for setting up KYC/KYT software and incorporating the project’s guiding principles, and adaptation of the company’s internal documents under the applicable KYC/KYT providerFinding a candidate for the AML/KYC officer post who satisfies the project’s expectations and regulatory standards, and get that individual approved by the client.Notifying FCIS/FNTT of the appointment of the chosen applicant to the role of AML officer and serving as the point person for any additional communications with the supervisory authorities.Completing a form and notifying the Financial Crime Investigation Service (FCIS) about the operations of the exchange operator and virtual currency wallet.3-4 weeks
4. CORPORATE ACCOUNT OPENING AND ACCOUNTINGThe procedure of opening an operational corporate account under crypto with a connected accounting service includes the following steps:Analysis of the best banks/EMIs, comparison of the bank’s and the client’s risk appetites based on previously created AML regulations (conducted concurrently with premise search).Starting the onboarding process simultaneously at a couple of crypto-friendly EMIsCreation of accounting policies for the client’s cryptocurrency businessIntegration of an accountant and initial advice on how to conduct business in accordance with crypto accounting policiesInitial configuration and integration with an accounting program and monthly accounting services2-4 weeks

Taxation of crypto companies and cryptocurrency transactions in Lithuania

Lithuanian crypto taxation basics: key takeaways

  • The corporate income tax rate in Lithuania is 15%.
  • Small businesses with up to 10 employees and gross yearly incomes under €300,000 may be subject to a lower rate of 0–5%.
  • Whether crypto transactions are taxed depends on the type of transaction. The token does not have a direct tax associated with it, similar to money, stocks, or investments.
  • Taxes on dividends are imposed at 15% on distributed profits.
  • Services provided by crypto exchangers are exempt from VAT.

Investors should be aware that the two primary taxes related to the following are the corporate income tax and the value-added tax. In specific circumstances, any of these taxes might be applied. Tokens that qualify as securities, for instance, are excluded from income tax under the Civil Code’s regulations. If payment is made in tokens, the tax exemption also applies to tokens issued for the use of goods and services. This is because tokens used to pay for goods or services are seen as money transactions and as such shouldn’t be subject to corporate income tax.

Investors may be liable to pay corporate income tax in other circumstances when tokens are regarded as earned income. Under Lithuanian law, investors may also be liable to personal income tax, which is levied at a standard rate of 15%.

Appointment of an AML Officer

According to Lithuanian AML law, VASPs must employ an AML Officer who will coordinate the execution of the law’s AML and counterterrorism funding prevention measures and work with the regulator. A board member must be appointed to oversee the execution of measures to prevent ML and/or TF when the business is run by a board. No later than 7 days following their appointment or replacement, such workers and board members must give written notice of their appointment to the FCIS.

The AML Officer must have the relevant training, work experience, and skills to apply a risk-based approach throughout the organization. The individual’s reputation is also crucial in this situation. Following the execution of the new law, an AML officer appointed to a crypto firm must be a tax resident of Lithuania, and there are restrictions on appointments to more than one VASP.

The AML Officer’s responsibilities include:

  • developing and updating the company’s internal policies related to AML/CTF and sanctions.
  • ensuring that the AML/CFT, sanctions policies, procedures, and internal control measures are adequate and proportionate, taking into account the characteristics of the company and the ML/TF, sanctions risks to which it is exposed;
  • implementing and maintaining an AML Program, making sure it is reviewed as needed;
  • making sure the Company complies with the legal requirement;
  • making sure employees keep all necessary records and implementing and maintaining this Program.
  • developing and maintaining appropriate monitoring mechanisms across the organization;
  • submitting an AML/CTF Compliance Report to the regulator each year;
  • ensuring client identification procedures are carried out in accordance with AML Program;
  • reporting instances of non-compliance to directors;
  • informing the Director(s)/Senior Management of the following:
    • the Company’s compliance with the law and AML Program;
    • the outcomes of any risk assessment conducted;
    • essential amendments to the company’s ML/TF risks;
    • any amendments to the Act or Rules.
  • carrying out ML/TF risk assessments of the client base, products and services, delivery method, and jurisdiction, as well as maintaining a record of all ML/TF risk assessments finished in the Risk Register.
  • cooperating and communicating with FCIS;
  • educating and training staff members on AML/CTF regulations and punishments; filing and transmission of pertinent reports (such as SAR and CTR);
  • developing and maintaining an ML/TF risk assessment for business-wide and individual ML/TF risk assessments;
  • performing any duties assigned to the AML Officer under the applicable law, internal policies, and job description.

How much does a crypto license in Lithuania cost?

With the assistance of the expert team here at Eternity Law International, it is possible to set up your crypto exchange in about 3-15 weeks. The total costs for preparation of corporate documentation, locating and opening bank account(s) with a crypto-friendly EMI, and registration of Lithuania crypto exchange license with the Registrar of Crypto Exchanges in Lithuania depend on each individual case: type of the license and scope of business, etc.

Get a crypto license in Lithuania with Eternity Law International

Since 2017, our company has been addressing problems that have arisen during the EU’s licensing procedure for cryptocurrency. In total, we have aided more than 500 clients from various countries in obtaining licenses. Our company is represented in Lithuania by a group of lawyers with expertise in corporate and Fintech law.

You can consider buying a ready-made license. The purchase of a ready-made company is quite advantageous and a time–saving option, which is highly attractive to individuals seeking a fast solution to launch their projects.

Please contact us and we will inform you about the procedure for obtaining the license.

What is the crypto exchange in Lithuania?

A cryptocurrency exchange Lithuania is a specially designed platform through which you can exchange and trade cryptocurrencies. Crypto funds can be exchanged among themselves or for fiat assets. In order to be able to work with such a platform, you need to obtain the appropriate official permission, which is issued by the local regulatory authority.

Is cryptocurrency allowed in Lithuania?

Cryptocurrencies in Lithuania can be used legally and are not prohibited by law. This jurisdiction provides loyal, but at the same time, reliable and strict regulation for the activities of companies related to cryptocurrencies. Thus, crypto license in Lithuania attracts an increasing number of foreign investors.

Can Lithuania use Binance?

The Binance crypto exchange Lithuania, which is the largest such platform in the world, is authorized to operate in this jurisdiction. Binance can operate in this jurisdiction as an operator of cryptocurrencies and wallets designed to store crypto funds.

Which bank is crypto friendly in Lithuania?

Some banking institutions in Lithuania are quite conservative regarding cryptocurrencies and do not open accounts that will be used for crypto-transactions under Lithuania crypto exchange license. There are also those who are ready to accept clients whose work is related to cryptocurrencies. In particular, the most crypto-friendly bank in Lithuania is Bankera.

crypto license in lithuania

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