LICENSING SOLUTIONS FOR BLOCKCHAIN, CRYPTOCURRENCY, ICO, STO AND SECURITY / UTILITY TOKEN OFFERINGS

Lithuania is one of a few European Union and European Economic Area (EU/EEA) jurisdictions that have clear and transparent cryptocurrency regulation. The Bank of Lithuania (Central bank and financial regulator) and Lithuanian Tax Inspectorate have officially published their positions on cryptocurrency transactions, taxation and other crypto-related issues. Private individuals and companies dealing with cryptocurrencies have clear guidance for moving funds from traditional fiat currency into cryptocurrencies (Bitcoin, Ethereum, Dash, etc.) and from cryptocurrency back into the fiat currency.

Crypto currency exchange and virtual currency wallet license

Lithuania recently introduced the registration of cryptocurrency exchange and crypto currency depository wallet operator being one of a few European Union (EU) members states that have virtual currency licensing and authorization procedure. Crypto operators have to implement their own AML/KYC procedures and are supervised by the Lithuanian Financial Crime Investigation Unit – FIU.

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’s cryptocurrency depository wallets.

Security Token Offerings STO licensing

European regulators follow the recommendations of the European Central Bank and the European Banking Authority stating that all cryptocurrency-based instruments with the features of securities are subject to the laws and regulations regulating public issue of securities. The modern Lithuanian Law on Crowdfunding and investment advisory regulation allow raising the capital through the security token offerings STO. The advisors licensed in Lithuania are allowed to distribute securities and other tokenized financial instruments all over the EU/EEA by offering them to the wide range of investors. International Securities Identification Number (ISIN) can be obtained for tokenised securities. ECOVIS ProventusLaw advice on security token issues and assists in preparation of documentation of Security Token Offering (STO) such as Securities Issue Prospectus, etc.

Cryptocurrency investment funds

Financial institutions often face difficulties in offering cryptocurrency-based investment instruments to traditional investors because of the licensing barriers. The official Lithuanian regulatory position allows the alternative investment funds licensed in Lithuania and designed for alternative investors to invest their assets into cryptocurrency and cryptocurrency-based investment instruments. It allows to issue investment units and other investment instruments based on cryptocurrency and distribute them in traditional financial markets attracting professional investors from all around the EU/EEA area.

Blockchain technology in finance

Modern regulatory approach allows the companies licensed in Lithuania to employ Blockchain technology in traditional finance by offering electronic money, securities and other financial instruments on Blockchain. The Bank of Lithuania (Central bank and financial regulator) developed its own Blockchain LBChain and offered it to the financial market participants to be used for their business needs. Employment of modern Blockchain technology in traditional finance gives the financial institutions licensed in Lithuania the opportunity to create new financial products and provide a wider range of services compared to the companies licensed in other EU jurisdictions.

More about FinTech licensing.

More about ECOVIS experience.

Kęstutis Kvainauskas

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

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