Starting a crypto business in Lithuania requires obtaining a crypto license. As a first step business shall have a physical presence in Lithuania, i.e., to have a limited liability company (UAB) to obtain crypto exchange and crypto depository wallet operator authorization.
Recently, Lithuania updated its legislation governing the crypto industry, imposing stricter requirements on crypto entrepreneurs. As of November 1st, 2022, a share capital of 125,000 EUR is required to start a crypto-business, i.e., to obtain authorization as a Virtual Asset Service Provider (VASP). Additionally, the new law mandates the appointment of an exclusive (local) AML officer for the reporting purposes.
It shall be noted that Lithuanian legislation does not obliges crypto businesses (VASPs) to keep authorized share capital of 125,000 EUR in the bank account at all times. Upon formation of a share capital VASP can use funds for the operational purposes and transfer funds out without any limitations.
This puts Lithuania at the forefront of crypto regulation in Europe, providing an efficient and cost-effective framework for businesses to operate within. With the implementation of some of the principles of the EU MiCA Directive already in place, Lithuania is setting a clear direction for the future of the crypto industry.
Lithuanian crypto license allows companies to provide the following services:
- Exchange crypto to crypto: allows users to exchange one cryptocurrency for another, without involving fiat currency.
- Exchange crypto to fiat and vice versa: enables users to exchange cryptocurrencies for fiat currency, such as USD or EUR, or vice versa.
- Crypto wallet service: storing cryptocurrencies on behalf of users in a secure manner, often using cold storage, multi-signature technology or in any other manner.
- Informational services on the balance: provides users with information on the balance of their cryptocurrency holdings in the indicated crypto wallets, typically through a user dashboard or mobile app.
- Crypto transactions: users to send cryptocurrency to a third party on their behalf, often through a simple and secure interface.
- Staking: holding a cryptocurrency in a wallet for a certain period of time in order to earn rewards or interest on the tokens.
- Crypto lending: lending cryptocurrency to others in exchange for interest payments, typically facilitated through a peer-to-peer lending platform.
Crypto exchange (VASP) licensing process in Lithuania
STAGE 1 – Initial meeting and assessment of crypto business
- Assessment of business needs and type of license required;
- Signing the Legal Service Agreement;
- Collecting relevant documents (of founders, etc.);
- Setting up the timelines for stages of the project.
STAGE 2 – Business establishment process in Lithuania
- Reservation of a company name;
- Providing the local address for the company;
- Opening accumulative account;
- Drafting incorporation documents (Articles of Association, Deed of Incorporation, etc.);
- Finalization incorporation process at notary and Centre of Registry;
- Ordering corporate documents for the client, if needed.
STAGE 3 – Business licensing process
- Workshop meeting for preparation of AML documents;
- Drafting all AML required internal documents;
- Assistance in setting up AML / KYC providers;
- Assistance in hiring and employing the AML Officer / MLRO;
- Filling in applications for issuance of VASP license (FCIS, Centre of Registry, etc.);
- Finalization of AML / CTF procedures and other internal policies.
STAGE 4 – setting up crypto business
- Opening operational / clients’ funds account;
- Introducing to the EMIs or other Fintechs for cooperation purposes;
- Assistance in renting the office;
- Setting up accounting;
- Hiring additional employees.
If any assistance would be needed, please do not hesitate to contact us for further information @ Fintech Balance.