CRYPTOCURRENCY EXCHANGE AND CRYPTO CURRENCY WALLET OPERATOR LICENSE

Currently Lithuania is widely recognized traditional finance jurisdiction for payment and electronic money licensing in Europe. Having cryptocurrency exchange and crypto currency depository wallet operator authorization Lithuania is one of few European Union and European Economic Area (EU/EEA) member states offering transparent and cost effective virtual currency authorization. Worlds biggest crypto exchange Binance holds Lithuanian crypto exchange and cryptocurrency depository wallet authorization for European market from the middle of 2020. ECOVIS advised Binance during whole incorporation and authorization process.

Types of crypto authorization

There are 2 types of cryptocurrency activity 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’s cryptocurrency depository wallets

New Lithuanian company incorporation and Crypto authorization process (including company bank account opening) can be done fast online without personal presence of the company shareholder(s) and director(s) in Lithuania.

Activities of the cryptocurrency exchange and crypto currency depository wallet operators must be separated from the licensed financial activity (payment and electronic money institution, bank, etc.). Nevertheless, licensed financial institutions are allowed to serve the fiat payments of the crypto dealing companies and their clients creating effective vehicle for crypto-fiat payments.

AML/KYC requirement for the companies holding cryptocurrency authorization

The legal entities (companies) registered in Lithuania and the affiliates of EU and non-EU companies registered in Lithuania can apply for the crypto authorization. Applicants must have all necessary AML/KYC polices and implemented procedures required for the provision of cryptocurrency-related activities. Cryptocurrency exchange and crypto currency depository wallet operators are supervised by the Lithuanian Financial Crime Investigation Unit – FIU. Members of the Management Board, as well as Ultimate Beneficial Owners (UBO’s) of the company, must meet the requirements of impeccable reputation. There is no requirement for 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 the Lithuanian FIU
  • Keeping records and client data
  • Employment of the Lithuanian AML officer
  • Preparation of AML/KYC polices and implementation of internal control procedures

Virtual Coin and Exchange Offering ICO/IEO registration for tokens distribution in Europe

Virtual Coin and Exchange Offering (ICO/IEO) and token distribution for the investors requires separate authorization. Separate AML/KYC and other reporting requirements are established for the companies carrying out  ICO/IEO activities and attracting financing through the public distribution of tokens and virtual coins to the investors. The legal entities (companies) registered in Lithuania as well as the affiliates of EU and non-EU companies registered in Lithuania are allowed to register and publicly distribute virtual coins by offering them to the investors in EU/EEA.

ECOVIS services in the field of cryptocurrency registration and authorization

ECOVIS provides a full set of services  of cryptocurrency exchange and crypto currency depository wallet operator authorization including company registration, preparation of all required AML/KYC policies and procedures. After the authorization process ECOVIS provides tax advice, bookkeeping and Lithuanian FIU compliance services for authorized entities. ECOVIS also assists in the opening of Bank and Electronic Money accounts for Crypto Companies.

WARNING! “Ready-made” crypto companies frequently offered by non-Lithuanian intermediaries are not recommended because it is a red flag for the regulator. AML policies offered by the non-Lithuanian intermediaries usually are exactly the same, don’t reflect client business model and don’t meet regulatory requirements. Signing notarial company share purchase agreement, change of articles and management may take even longer than incorporation of the new company and proper authorization for crypto activity.

More about ECOVIS experience.

Kęstutis Kvainauskas

Lawyer, attorney at law, partner of the law firm.

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