What are the regulatory rules in Lithuania, and how can crypto businesses comply with them?

Lithuania is a country that supports the IT industry and strives to create perfect conditions. It became one of the EU’s first countries to try to develop tools for regulating the crypto industry. Crypto regulations in Lithuania are trying to protect their citizens and create favorable conditions for developing the crypto business.

How will the regulation of the crypto industry change shortly?

Initially, Lithuanian cryptocurrency regulation established relatively soft rules for regulating this industry. However, it gradually became apparent that there was a need to tighten them up a bit to protect users. The main requirements relating to the issues of combating money laundering, so it was decided to amend the AML/CTF Law. These changes will come into effect in February 2023. The government of the country wants to introduce stricter requirements for crypto organizations. For example, the authorized capital will be increased from 2,500 euros to 125,000 euros. If this jurisdiction was ideal for small startups earlier, you need relatively sizable authorized money today. In addition, there was no requirement for a local office and employees. Today you must hire a regional director and anti-money laundering specialist. Key specialists must have a good specialized education, experience in a relevant position, and an excellent reputation. Another new requirement is doing business in this jurisdiction. Although the Lithuanian permit allows you to work throughout the EU, government authorities require that you serve not only foreigners but also residents of this country.

How to register an organization?

You must go through a few essential steps to get a cryptocurrency license in Lithuania. So, your organization must be registered in this jurisdiction. You can do this remotely and do not need to fly to this country. You need to prepare the necessary documents in advance. If you are a foreigner, you can open a business here, but all documents must be translated into Lithuanian under an apostille. It usually takes about 5 days to register a firm.

After registering an organization, you need to open a local bank account and pay fees. You must prepare the necessary documents and check how your organization complies with the requirements of regulatory authorities. Usually, the preparatory stage takes about a week.

After that, you can apply for a permit. Government agencies have 2 weeks to review your application. If they have questions or notice errors, they can extend this period up to 2 months and allow you to make changes.

Thus, obtaining a permit in this jurisdiction takes only a month, much less than in Estonia or the UK. Most organizations that seek to obtain permission as quickly as possible choose this particular jurisdiction.

What requirements must an organization meet?

Crypto Regulations Lithuania
Crypto regulations set the most specific requirements for crypto organizations. They pay special attention to the issues of combating money laundering, financial terrorism, and fraud. Among the essential requirements are the following:
  • Authorized capital of more than 125 thousand euros;
  • At least one director, shareholder, and anti-money laundering specialist (may combine the position of a shareholder);
  • No criminal records for all team members;
  • Compliance with KYC/AML policy;
  • The organization is registered in this jurisdiction.
Previously, the authorized capital was 2,500 euros, but the state authorities decided to increase this to 125,000 euros.
Your organization must have a local director and an anti-money laundering specialist. The choice of these specialists must be treated very carefully. They must have an excellent reputation, experience in a similar position, and the necessary stock of knowledge. No member of your organization should have a previous criminal record. You must verify all your clients and store transaction information. Your clients must provide proof of identity and residence. You cannot serve anonymous transactions. If you notice suspicious transactions, you should report them to government authorities. The duties of anti-money laundering specialists include monitoring the activities of clients and employees of the organization. They must also provide regular reports on the activities of the organization. As you can see, if you are ready to work honestly and openly, you will not have any problems with licensing. We recommend you engage independent experts to check your organization’s readiness for licensing.

Types of licenses

In Lithuania crypto businesses must obtain a work permit. Here you will be offered to obtain two types of licenses — for wallets and the exchange. The choice depends on what services you plan to provide. If you exchange fiat for crypto, crypto for crypto, or crypto for other types of electronic money, then you need to obtain a permit for exchanges. But, if you want to store crypto assets and get paid for it, you need to get a permit for wallets.

Taxation

If you want to make money with cryptocurrency in Lithuania, you must pay taxes regularly. Relatively simple taxation applies here:
  • Corporate income tax — 15%;
  • VAT — 21%;
  • State insurance — 21%;
  • WHT — 15.
The level of taxes here is slightly higher than in other countries. You need to contact our specialists to understand taxation’s peculiarities in this jurisdiction better. They will evaluate your firm’s activities and tell you how this jurisdiction suits you.

Features of crypto business regulation

Currently, this country has no separate laws to regulate crypto activities. However, you can store, exchange or use crypto assets to pay for goods and services, provided that you comply with laws that relate to money laundering and financial terrorism. Government agencies have issued a circular stating that crypto assets are not legal tender. Existing legislative assets require crypto companies to register, comply with KYC / AML policies, and must open bank accounts in this territory. Government bodies have assured that they will not ban the crypto industry; however, they want to learn how to regulate it. If your organization does not receive a permit but starts operating in the country, the platform will be blocked, and the owner of such a business will have big problems with the law.

Does this jurisdiction support startups?

This country was able to achieve stable economic growth thanks to the support of the IT industry. It also applies to crypto startups. Thus, the Bank of Lithuania launched LBChain based on the blockchain, which allows the testing of various business ideas. Also, the Blockchain Center Vilnius was created here, where crypto enthusiasts come together. You can find like-minded people and share your thoughts and attractive technical solutions here. Such communication enables different types of crypto businesses. There are no tax incentives for startups or small companies, as in Poland. However, government agencies enable such organizations to develop and support them at different stages actively. If you want to understand how your startup can develop in this jurisdiction, you should contact our experts.

In the end

This country became the first in the EU to start creating a legal framework for cryptocurrencies. Today, this country is one of the leaders in registered crypto organizations. To obtain a permit in this jurisdiction, you need to seek the help of specialized lawyers. They will check how your organization complies with the requirements of government agencies, help you complete the necessary documents, and help you understand the terms of taxation.

FAQ

Every crypto organization that wants to operate in this jurisdiction must obtain a permit and pay taxes. Particular attention should be paid to the implementation of the anti-money laundering policy.

All crypto organizations operating in this jurisdiction’s territory must pay taxes.

To obtain a work permit, you must register, pay fees, and apply for a permit. This process takes about a month on average, which is much less than in other jurisdictions.

Currently, crypto-assets do not have a special status; however, you can use them to pay for goods or services, mining, or trading.