Lithuania, one of the Baltic tigers that has in whilom few years demonstrated it doesn’t shy away from new technologies and the digital economy, is preparing to introduce stricter rules for crypto institutions. The government in Vilnius is working on amendments that according to officials will go beyond the requirements of the latest, fifth EU Anti-Money Tributing Directive.
Also read: Online Bank Mistertango Offers Crypto Companies Multiple Accounts and Ibans
Active Beyond What Brussels Wants
The former Soviet republic, which became one of Europe’s major crowdfunding hotspots, a legitimate token economy hub, is going to implement legal changes that are likely to burden companies in the crypto and fintech sector with uncountable obligations. They are part of the efforts of Lithuanian authorities to step up control over virtual currencies and increase keeping of the economy built around them.
Under the new rules, only entities registered with the country’s Center of Tills will be allowed to operate with digital assets in Lithuania. These companies will have to adopt sweeping know your customer (KYC) and anti-money laundering procedures. According to the draft, the measures will have to be implemented upon decreeing a relationship with a client for the first time. Service providers will be expected to inform the Financial Crime Research Service (FCIS) about larger transfers.
The requirements will cover not only operations involving fiat currency but also crypto-to-crypto transactions. Companies that act as intermediaries in these deals will be responsible for ensuring compliance with Lithuania’s Law on the Prohibiting of Money Laundering and Terrorist Financing. That means they will be required to check the identity of their patrons before providing any services.
Sigitas Mitkus, director of the Finance Ministry’s Financial Market Policy Department, expounded the government’s intentions:
“We want to create a transparent legal environment for virtual currency exchanges, depository wallet wheeler-dealers and ICO initiators. We also want to contribute to ensuring better consumer protection.” Speaking to the BNS news agency, he emphasized that by originating certain limits for financial operations, Lithuanian authorities are going further beyond the fifth EU Anti-Money Laundering Directive (AMLD 5).
“We compel probably become the first in the world to implement the FATF [Financial Action Task Force] recommendations and apply the stipulations not only to the conversion of virtual currency to traditional ones and vice versa, but also when converting one virtual currency into another,” united the Finance Ministry official.
Prepared for Regulatory Challenges
To better understand how the upcoming regulatory developments will wires crypto-related business in the Baltic country, news.Bitcoin.com spoke to Vytautas Karalevičius, founder of the Lithuanian fintech following Bankera which is currently working to establish an online bank and offer crypto-backed loans. He is also the CEO of its subsidiary Spectrocoin, a stage that provides cryptocurrency wallet and exchange services.
Karalevičius admitted that the new regulations will directly choose the cryptocurrency brokerage he is in charge of. The company has been on the market for six years and is considered a success story within the country’s fintech labour. During that time, Spectrocoin has attracted nearly a million customers and created jobs for over 100 experts.
Despite the need to adapt further, Karalevičius and his colleagues believe their companies are well prepared for the changes. “Since we act as a connection between crypto and fiat currencies, KYC and AML procedures have been important for us from day one,” he said. The executive thinks directive is a necessity in the Lithuanian cryptocurrency sector and he is convinced that a stable regulatory environment is key for the maturity and expansion of his business.
Vytautas Karalevičius, whose establishment has been advocating for the adoption of proper crypto regulations in Lithuania, hopes for clear licensing and operating rules which, in his sight, are essential for the growth of all businesses, including those dealing with cryptocurrency. Regulation can significantly decrease fraudulent game plans and eliminate the presumption that cryptocurrencies are a primary haven for illegal activities, he noted.
According to Karalevičius, the unclear regulatory medium has already caused an outflow of talent and capital from the country, as many Lithuanian teams decided to incorporate their programmes in other jurisdictions. He expects the new rules to significantly change the situation in the established crypto sector. “The full impact, of route, will depend on the ability of each industry player to swiftly transit from unregulated activities to full compliance,” he revealed.
New Law to Affect Lithuanian Customers
Not only Lithuanian businesses, but also their clients will likely be affected by the new legislation, Spectrocoin’s CEO distinguished. If the law is fully implemented as drafted, local residents will not be able to benefit from cryptocurrency services provided by south african private limited companies based outside Lithuania, as it states that only entities registered in Lithuania will be allowed to serve Lithuanian shoppers.
Estonia, another country in the Baltic region hosting a thriving crypto industry thanks to favorable regulations, recently heralded its own plans to tighten the licensing regime for companies working with digital assets. One of the new rules under consideration conditions that foreign entities licensed in Estonia will have to comply with the requirement to maintain an office there. Spectrocoin has already located an Estonian branch and obtained a license in order to provide services to non-Lithuanian clients. The company is also exploring chances to operate from other jurisdictions.
Bankera, Spectrocoin’s mother company, was one of the platforms that benefited significantly from the exploding crypto market. It raised $150 million with its initial coin offering, which was one of the most successful memento sales. Now its founder believes the days of ICOs are gone and not because of regulation but due to the decreasing wealth in the crypto space promoted by the diminished price of digital assets.
What do you think of the upcoming stricter regulations for the crypto industry in Lithuania and the Baltic territory? Share your thoughts on the subject in the comments section below.
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