Cryptocurrency communities are always facing a problem moving funds from traditional fiat currencies into cryptocurrencies (Bitcoin, Ethereum, Dash, etc.) and from cryptocurrency back in to the fiat currencies. This creates a barrier for retail clients and especially for institutional investors to enter the cryptocurrency market.

Most of the retail merchants still do not accept cryptocurrency as means of payment. ECOVIS ProventusLaw offers licensing solutions allowing smooth transfer from the cryptocurrencies in to the fiat currencies and opposite direction. Licensing solutions enables create integrated multicurrency internet platform, store and process fiat currencies together with cryptocurrencies.

_jbm2144As most of the European financial regulators, Bank of Lithuania coherently follows the position that cryptocurrency transactions are not the licensed financial activity. On the other hand, regulator allows and do not makes any barriers for the cryptocurrency transactions. The only key regulatory requirement is to separate cryptocurrency activity from the licensed financial activity. The best way to achieve the separation is to incorporate two separate companies. One company holding Payment Institution (PI) or Electronic Money Institution (EMI) license, open fiat currency accounts for the clients, issue payment cards and process traditional payments. This company may also hold client funds dedicated to the cryptocurrency transactions.

Another parallel company processes cryptocurrency exchange and other cryptocurrency transactions. The same shareholders may own both of the companies. Certain integration of both of the companies websites also allowed. Cryptocurrency dealing company may be not necessarily European (EU/EEA) jurisdiction. In case certain licensing of the cryptocurrency dealing company is required, ECOVIS ProventusLaw may offer licensing solution within EU/EEA jurisdiction or other jurisdictions.

The double company scheme described above creates pan-Europen licensed vehicle meeting modern client requirements and allowing fast easy transfer of the funds form fiat currencies in to the cryptocurrencies. The scheme also allows use of the cryptocurrencies as means of traditional payment, serve Initial Coin Offering (ICO) transactions and open a gateway for the traditional financial market participants in to the fast growing cryptocurrency community.

Cryptocurrency communities often facing barriers offering cryptocurrency based investment instruments to the traditional investors because of the licensing barriers. ECOVIS ProventusLaw offers licensing solutions allowing “securitization” of cryptocurrency based instruments what allows these investment instruments into to the traditional financial markets and makes them attractive for institutional investors.

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Inga Karulaitytė – Kvainauskienė