Cryptocurrency license in Lithuania.
Lithuania is one of the leaders of the European fintech market. Here you can find favorable conditions to carry out a crypto business, while a loyal taxation system stimulates the growth of the crypto assets market. Despite the fact that Lithuanian government plans to tighten the regulation of the crypto sphere, this jurisdiction remains popular for project licensing. In a new article, we will reveal the reason for the popularity of this Baltic country when registering a fintech business, and discuss the nuances of the obtaining of a cryptocurrency license in Lithuania.
Until this year, there was rather ambiguous situation present, since the country has no special regulation of the fintech business. Cryptocurrency transaction in Lithuania is not officially banned for individuals, but the Central Bank does not allow banks and financial institutions to work with crypto assets. If a company is planning to provide financial services, it falls under the supervision of the controlling bodies.
By the end of 2022, the Finance Ministry will have tightened the requirements for the registration of crypto projects, aiming to increase the transparency of the sector and stimulate its development within the legal framework. Lithuanian government approved the adjustment to the Law on the Prevention of Money Laundering and Terrorist Financing, many of which are coming into force this year.
New provisions were prepared by the Bank of Lithuania, Ministries of Finance and Interior, Financial Crime Investigation Service, Lithuanian Center of Competence for the Prevention of Money Laundering. It is thus planned to increase the minimum charter capital of the crypto projects from €2.5 thousand up to €125 thousand. Anonymous accounts for the provision of the transparency of service suppliers’ activity will be prohibited to ensure the transparency of suppliers’ activity. New requirements provide for the creation of a separate register of custodial platforms and crypto exchange operators.
Despite the more severe requirements for crypto project licensing, the main goal of the innovations is to make Lithuania a fintech center of the Baltic region. And it will succeed, since the country has already become the harbor for numerous startups and giants of the field (e.g., among other licenses, Binance has also a Lithuanian registration), and also proved to be ready for the interaction with innovative projects. The Central Bank of Lithuania has participated in the development of LBChain, a blockchain-based platform, where fintech companies and startups can test their business solutions.
Types of cryptocurrency licenses in Lithuania
The jurisdiction’s legal and regulatory framework enables to obtain the following types of crypto activity permits:
- Cryptocurrency exchange license is issued to the Virtual currency exchange operator that provides the services of exchange, purchase, and (or) sell of virtual currency for fiat money and vice versa thus getting fees from the operator. The permit also enables trading and exchanging of other digital assets;
- Crypto wallet and custodian services license is granted to the Depository virtual currency wallet operator. Such companies provide services for custodial crypto wallets management (meaning private keys are stored by the company–provider of the service) on behalf of clients, including the creation and storage of encrypted keys for operations with digital money.
If necessary, it is allowed to issue an application to obtain two cryptocurrency licenses in Lithuania.
Cost of licensing in Lithuania with SBSB
Cost of licensing depends on the range of additional services (consulting, preparation of the package of documents, assistance with the opening of a bank account for depositing a share capital, KYC/AML procedure development, company policies).
The launch of crypto projects is a long and troublesome process, with legal nuances that are difficult to deal with without professional help. Address SBSS Lawyers to get a cryptocurrency license in Lithuania. Our significant experience in working with fintech projects of any complexity enables the provision of a complex turnkey service: consulting, registration, software development, and calculations of the tax burden, while supporting at every stage of the processing.
Requirements for licensees in Lithuania for registering a crypto company
The Central Bank serves as a crypto regulator, while The Financial Crime Investigation Service (FCIS) supervisions the activity of crypto companies. It is an independent structural unit of the Lithuanian Police Department, which also deals with licensing.
Potential licensees face the following requirements:
- hire a specialist in Anti-Money Laundering who will carry out financial monitoring (must be a resident of the Republic of Lithuania);
- review of clients and transactions according to the AML/KYC regulations;
- minimum charter capital in the amount of €2500 (will be increased to €125 000);
- monthly salary report, annual financial statements and tax filings;
- no criminal record of board members;
- impeccable business reputation in the crypto field;
- a company should have at least one owner, shareholder, and board member (with no restrictions regarding place of residence);
- all clients are biased to go through the identification procedure;
- implementation of an internal operational control and assessment of possible risks;
- clients’ data recording with the possibility of their transmission to the regulator;
- registered local physical address (office is optionally).
What documents are required to obtain a crypto license in Lithuania?
The following documents are required to file an application for a cryptocurrency license in Lithuania:
- copy of a passport of the applicant’s country of residence;
- business model with the description of a company’s activity;
- CV of crypto project members;
- Criminal Record Certificate (not older than 3 months) for owners, CEOs, beneficiaries, and an AML officer;
- address of the website used to provide services;
- power of attorney (POA) if the permit is obtained remotely;
- all beneficiaries’ data is provided upon FCIS request.
The benefits of the crypto exchange licenses in Lithuania include the possibility of remote registration and absence of requirements regarding the security deposit or liability insurance of a crypto company or its officials.
The process of obtaining a crypto license in Lithuania
Registration of a crypto company has several stages:
- registration of a limited liability company (UAB);
- development of the AML/KYC policy;
- compliance specialist appointment (AML officer);
- preparation of a package of documents with the information regarding CEOs and shareholders;
- opening a corporate account for depositing a share capital ;
- confirmation of an actual legal address;
- filing an application;
- project launch upon licensing.
Cryptocurrency campaign taxation in Lithuania
The standard rate of tax on enterprise’s income is 15%. Meanwhile, companies with less than 10 employees and annual gross revenue less than €300 000 have a reduced income tax rate: 0% for the first year and 5% for the second and the following years.
Cryptocurrency transaction taxation in Lithuania
Valued Added Tax is set at 21%. The threshold of annual turnover of taxable transactions, upon reaching which it is necessary to register the VAT payer, is €45 000. Cryptocurrency exchange services are not subject to VAT taxation. Dividend payments are taxed by 15%.
Contact SBSB Lawyers for more detailed information. Our specialists assist with crypto licensing in Lithuania from the preparation of the package of documents and up to the submission of an application in this jurisdiction while offering individual solution to every client.