CRYPTOCURRENCY EXCHANGE AND CRYPTO CURRENCY WALLET OPERATOR LICENSE
Being recognized traditional finance jurisdiction in European Union and European Economic Area (EU/EEA) Lithuania recently introduced cryptocurrency exchange and crypto currency depository wallet operator registration being one of few European Union (EU) members states having virtual currency licensing and authorization procedure.
Types of crypto activity authorization
There are 2 types of cryptocurrency authorization:
– Crypto currency exchange operator is the company or the affiliate of other company exchanging cryptocurrency owned by the client for the commission fee
– Crypto currency depository wallet operator is the company or the affiliate of other company managing client cryptocurrency depository wallets
Activities of the cryptocurrency exchange and crypto currency depository wallet operators need to be separated from the licensed financial activity (payment and electronic money institution,bank, etc.). Nevertheless, licensed financial institutions allowed to serve the fiat payments of the crypto dealing companies and their clients creating effective vehicle for crypto-fiat payments.
Initial Coin Offering ICO registration for tokens distribution in Europe
Initial Coin Offering (ICO) and token distribution for the investors in Europe requires separate authorization. Separate AML/KYC and other reporting requirement are established for the companies carrying out ICO activities and attracting financing through the public distribution of tokens and virtual coins to the investors. Lithuanian registered legal entities (companies) as well as Lithuanian registered affiliates of EU and non-EU companies allowed to register and publicly distribute virtual coins offering themto the investors in all EU/EEA area.
AML/KYC requirement for the companies holding cryptocurrency authorization
Lithuanian registered legal entities (companies) and Lithuanian registered affiliates of EU and non-EU companies can apply for the crypto authorization. Applicants need to have all necessary AML/KYC polices and implemented procedures necessary for the provision of cryptocurrency related activities. Cryptocurrency exchange and crypto currency depository wallet operators are supervised by Lithuanian Financial Crime Investigation Unit – FIU.
Members of the Management Board as well as Ultimate Beneficial Owners (UBO’s) of the company need to meet the requirements of impeccable reputation. There is no requirement forth the directors and members of the board to be Lithuanian/European residents.
General requirements for the entities engaged in cryptocurrency activities:
– Customer identification and verification
– Reporting to Lithuanian FIU
– Keeping records and client data
– Employment of Lithuanian AML officer
– Preparation of AML/KYC polices and implementation of internal control procedures
ECOVIS services in the field of cryptocurrency registration and authorization
ECOVIS ProventusLaw provides full set of cryptocurrency exchange and crypto currency depository wallet operator authorization services including company registration in Lithuania and preparation of all required AML/KYC policies and procedures. After the authorization process ECOVIS provides bookkeeping and Lithuanian FIU compliance services for authorized entities.
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