Crypto exchange license Lithuania

LITHUANIA

What makes it unique

ideal conditions for launching finch businesses

favorable environment for developing start-up fins

simplified licensing procedures

one of the most cryptocurrency-friendly jurisdictions in the EU

Lithuania has created almost ideal conditions for launching finch businesses, as well as a favorable environment for developing startup fins and simplified licensing procedures. It is one of the few member States of the European Union (EU) and the European Economic Area to offer a license for virtual currency transactions.

If you want to start a company in Lithuania operating as a cryptographic business, you need to know that you need a cryptographic license. Although Lithuania has not established a coherent legal framework for dealing with cryptocurrencies, it has nevertheless licensed cryptocurrency exchange and purse-holding companies, becoming one of the few States of the European Union, where licensing and authorization procedures are in place for new virtual currency service providers.

Lithuania is now becoming one of the most cryptocurrency-friendly jurisdictions in the EU. In the next few years, its legislation did not provide for substantial changes, which, for example, were already taking place in Estonia. For investors interested in getting a crypto license in Lithuania, we have prepared this material.

In this jurisdiction, favorable conditions have been created for the registration of a financial company. The Central Bank provides comprehensive support for the development of financial technologies and non-banking services for payment. The country also supports and promotes crypto-startups. Compared to neighboring Estonia, Lithuanian regulation of cryptocurrency can be considered more flexible.

Regulations

The legislation on the Lithuanian market of cryptocurrencies is rather complex and is divided between two main
categories, which vary according to the rights granted to the issue of the original coins of proposals (ICOS).

There are two main categories:

ICO or tokens that do not offer rights to management or profit

ICO and tokens that provide the right to profit and control

In addition, tokens and ICO in Lithuania that do not offer management rights and profits are divided into two categories according to the basic principle of the law that regulates them. Thus, there are ICO and tokens that are created solely for the purpose of granting the right to use a product or service, and are regulated by the Civil Code. In the same category are ICO and tokens that are used as payment instruments or used for charitable purposes. Both categories are directly regulated by the Anti-Money Laundering and Financial Fraud Act. However, all regulation of cryptocurrencies in all three categories would be subject to the laws mentioned earlier, except that the former would first be regulated under the Civil Code, given its simpler nature.

Lithuanian cryptocurrency for ICO and tokens that offer management and profit rights are regulated by numerous legal acts, depending on the specifics of the cryptocurrency:

  • ICO and tokens derived from the characteristics of securities are regulated by the Securities Act.
  • Cryptotokens that fall within the characteristics of crowdfunding are regulated under the Crowdfunding Act.
  • ICO and tokens that can be included as financial instruments will be regulated in accordance with the legal framework of the Financial Instrument Markets Act.

Types and procedure

Investors who want to start a company in Lithuania in the crypto industry should look closely at the laws applicable to their selected cryptographic activities, tax obligations, accounting procedures and any other issues, including obtaining the licenses and authorizations necessary for these commercial activities.

Lithuania provides 2 types of crypto licenses:

  • A crypto license in Lithuania. It is an official license that covers exchange services for real money for cryptocurrency and vice versa, as well as cryptocurrency for cryptocurrency.
  • License of the operator of the depositary purse of the cryptocurrency. This crypto license in Lithuania is necessary for those who provide purses for storage of virtual currency. The cryptocurrency purse provider creates encrypted keys for clients who can use this service to store, exchange and transfer virtual money.

The company can request both licenses at once. Licenses for cryptocurrency are regulated by the Financial Crimes Investigation Service (FCIS) of Lithuania. The processing time is approximately 1-2 months.

To apply for a Lithuanian cryptocurrency license, a number of requirements must be met. The first and main step is the registration of a limited liability company (UAB). The next steps in the licensing process include:

To do business with cryptocurrency assets in Lithuania, a licensed firm must maintain clear and constant control over all customers and transactions in accordance with AML/KYC rules. The inspection body may request information on the activities of the enterprise. In order to open a corporate account with the Bank of Lithuania it is necessary to prepare certain documents (registration card, AoA, MoA), notarized, apostilled, and translated into English.

Lithuania crypto

WHY LITHUANIA

Registration of crypto activities in Lithuania has the following advantages:

Taxation

With regard to taxation, investors should be aware that core taxes relate to: corporate income tax, value added tax and personal income tax. Any of these taxes may be assessed in certain situations. For example, income tax exemptions apply to tokens that can be identified as securities, in accordance with the rules of the Civil Code. Tax exemptions also apply to tokens that are issued for the use of products and services if payment is made in tokens. This is because tokens used to purchase products or services are considered money transfers that should not be subject to corporate income tax.

In other situations, where tokens are recognized as earned income, investors may be required to pay corporate income tax. According to the Lithuanian legislation on cryptocurrency, investors may also be subject to income tax on natural persons, at a standard rate of 15 per cent.

Required documents

Investors who need a license for a Lithuanian cryptocurrency company will have to provide the following:

  • Valid passport of each founder;
  • Power of attorney (PoA);
  • Extensive information on the company’s business model and licensed activities;
  • Summaries of all the founders of the company so that local institutions can learn about the experience and capabilities of all those involved in the cryptographic industry;
  • The address of the website where services will be offered;
  • Certificate of absence of a criminal record from the register of criminal records (not more than 3 months) for shareholder(s), member(s) of the board of directors, the final beneficiary owner(s) and the compassionate specialist.

All the above-mentioned documents must be notarized by a notary public and an apostille in English. is also required. If these documents are filed in accordance with the requirements, the regulator will initiate the procedure for issuing a license for the cryptocurrency of Lithuania. Considering that this is a complicated procedure, our team of consultants is at your disposal for advice and legal assistance in obtaining a crypto license in Lithuania.

Aspects to consider

Registration of a crypto company in Lithuania is considered one of the available and budgetary options for creating a business in the sphere of financial technologies in Europe. Until recently, businessmen were considering launching crypto activities in Estonia, as jurisdiction was characterized by rather loyal licensing requirements. However, after in 2020-2021. The legislation of the Republic of Estonia has been amended to require virtual asset service providers (VASP) to comply with the same rules as financial institutions, and more than 1,000 crypto licenses have been withdrawn. Regulators have tightened licensing requirements, resulting not only in obligations in the AML and sabstens but also in a substantial increase in the required capital stock.Previously, Estonia had been a priority for those wishing to start cryptobesystics, but in the light of recent events, entrepreneurs were looking for alternatives.

One such alternative would be to register a company for crypto activities in Lithuania. This state is also a member of the European Union, but is known to have a regulated but friendly environment for crypto business.

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