Lithuania approved an action plan for FinTech, promising simpler regulation

The Lithuanian government has approved an updated 2021 Fintech action plan, which includes 4 tasks: development of an environment favorable to FinTech companies, promotion of Lithuanian jurisdiction in target markets, increasing the awareness and use of financial technologies as well as promoting the export of services and goods of FinTech companies based in Lithuania.

Lithuania – among top 5 FinTech jurisdictions in the world

Despite the economic downturn caused by the COVID-19 pandemic, in 2020 The Lithuanian FinTech sector continued to grow. According to Invest Lithuania, the official Government agency for Foreign Direct Investment and Business Development, the number of FinTech companies grew by 10% and reached 230, the number of employees grew by 18% – up to 4,000, and several significant players of the sector moved to Lithuania. The expansion of Fintech was further stimulated by Brexit when London-based companies decided to obtain a license in Lithuania to continue operating in the single European market.

In the international FinTech index, Lithuania ranks fourth in the world and first in the European Union. With a continuous focus on improving its business and regulatory environment, Lithuania has strengthened its position as one of the top ecosystems globally for developing and rapidly scaling innovative Fintech solutions.

“This growth shows that the Fintech sector in Lithuania is strong, welcoming, and built on effective collaboration between the public and private sectors. Lithuania is an example of how even small countries can make a big difference and impact in the FinTech landscape by seizing on opportunities to make it easier for FinTech companies to form, and that with the advantages of harmonized rules that let firms based there trade across the European Union”, – says Inga Karulaitytė, attorney at law of ECOVIS ProventusLaw, a law firm specializing in FinTech licensing, AML and compliance issues.

Increased attention to FinTech compliance issues

The new FinTech action plan foresees the improvement of the legal framework, which includes the increase of the possibilities of peer-to-peer lending platforms, the development of payment services in the internal market, the activities of crowdfunding platform operators, and the updating of simplified customer identification conditions.

Moreover, it is also planned to improve the access to data – by increasing the availability of services for foreigners with e-resident status, which would facilitate opportunities for foreigners to establish a company or office in Lithuania, to pay taxes, to access the market participants to data held by state institutions.

As announces by the Ministry of Finance of the Republic of Lithuania, this year’s plan is exceptional – Lithuania is beginning to address not only vertical issues but also broader issues of digitalization of the entire financial sector. According to Minister of Finance Gintarė Skaistė, undoubtedly, risk management to fully ensure consumer protection, great attention to the prevention of money laundering, seem to be top themes in the next years. What is more, according to her, this year will aim to attract more operators of crowdfunding platforms to Lithuania, as well as Wealth tech and Insurtech companies. The international awareness of Lithuania and Vilnius will be increased and the participation of companies in foreign events will be encouraged.

The Lithuania Government is committed to update the FinTech development plan and implement its provisions in their program implementation plan.