Private individuals and companies dealing with traditional Cryptocurrency often face a problem moving funds from traditional fiat currency into cryptocurrencies (Bitcoin, Ethereum, Dash, etc.) and from cryptocurrency back into the fiat currency. This creates a barrier to pay for the goods and services by the means of cryptocurrency and invest in to cryptocurrency based instruments. ECOVIS ProventusLaw offers different solutions.

Licensing of Initial Coin Offerings ICO and Security Token Offerings STO

Legalisation and licensing of ICO’s, STO’s and other token offerings are the major problems for ICO/STO organisers in most of the jurisdictions. ECOVIS ProventusLaw provides ICO, STO and token offering licensing solutions registering them as securities or without securities registration. Modern Lithuanian Law on Crowdfunding and Brokerage/Investment advisory activity regulation allows Lithuanian licensed brokers and crowdfunding platform operators raise the capital of their clients through modern security and utility token offerings. Licensed operators allowed to distribute securities and other tokenized instruments all over the European Union offering them to the wide range of investors.

Electronic Money and securities on Blockchain

Modern regulatory approach allows Lithuanian licensed Electronic Money Institutions issue Electronic Money on Blockchain as well as employment of Blockchain technology by financial advisory/brokerage companies in securities and security tokens distribution. Possibility to use Blockchain does not eliminate requirement to follow transparency and applicable AML/KYC procedures. Employment of modern Blockchain technology in traditional finance gives Lithuanian licensed finance institutions opportunity to create new financial products and provide wider range of services comparing to the companies licensed in other EU jurisdictions.

Fund transfers fiat currencies/cryptocurrencies

Lithuanian regulatory approach towards the traditional cryptocurrency transactions is clear and well defined in the official position published by the Bank of Lithuania available at website of the Bank of Lithuania.

As most of European financial regulators, the Bank of Lithuania coherently follows the position that cryptocurrency transactions are not licensed financial activity. The key regulatory requirement is clear separation of cryptocurrency activity and licensed financial activity.

Preparation of ICO, STO and token offerings registration and licensing documentation

European regulators follow the opinion of European Central Bank and European Banking Authority indicating that all the cryptocurrency-based instruments having features of securities are subject to the laws regulating the public issue of securities.

ECOVIS ProventusLaw ECOVIS ProventusLaw advice on security/utility token issues and assists in preparation of Initial Coin Offering (ICO) documentation (White Paper, etc.) and Security Token Issue (STO) documentation (Security Issue prospectus, etc.). Issued securities can be registered for distribution in European Economic Area and obtain ISIN numbers.

Securitization of cryptocurrency based investment instruments

Financial institutions often face difficulties offering cryptocurrency-based investment instruments to traditional investors because of the licensing barriers. Official position published by the Bank of Lithuania allows Lithuanian licensed alternative investment funds intended for professional investors invest their assets in to the cryptocurrency and cryptocurrency-based instrument instruments allowing “securitization” of cryptocurrency, digital coins, tokens, etc. “Securitization” allows the issue of traditional securities based on cryptocurrency instruments and distribute them in traditional financial markets attracting professional investors from all around European Union.

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