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

Lithuania is one of few European Union and European Economic Area (EU/EEA) jurisdiction having clear and transparent cryptocurency regulation. Bank of Lithuania (Central bank and financial regulator) and Lithuanian Tax Inspectorate have officially published positions on cryptocurrency transactions, taxation and other crypto related issues. Private individuals and companies dealing with cryptocurrencies have clear guidance 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 cryptocurrency exchange and crypto currency depository wallet operator registration being one of few European Union (EU) members states having virtual currency licensing and authorisation procedure. Crypto operators need to implement their own AML/KYC procedures and are supervised by Lithuanian Financial Crime Investigation Unit – FIU.

There are 2 types of cryptocurrency authorisation:

– 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.

Security Token Offerings STO licensing

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

Modern Lithuanian Law on Crowdfunding and investment advisory regulation allow raising of the capital through the security token offerings STO. Lithuanian licensed advisors allowed to distribute securities and other tokenized financial instruments all over the EU/EEA area 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 Security Token Offering (STO) documentation such as Securities Issue Prospectus, etc.

Cryptocurrency investment funds

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

Blockchain technology in finance

Modern regulatory approach allows Lithuanian licensed companies employ Blockchain technology in traditional finance offering electronic money, securities and other financial instruments on Blockchain. Bank of Lithuania (Central bank and financial regulator) developed own Blockchain LBChain offered to the financial market participants to be used for their business needs. 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.

More about FinTech licensing.

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