Lithuania is one of few European Union and European Economic Area (EU/EEA) member states having cryptocurrency exchange and cryptocurrency depository wallet operator authorization. Being a widely recognized traditional finance jurisdiction for payment and electronic money licensing in Europe Lithuania also offers transparent and cost-effective virtual currency authorization. Worlds biggest crypto exchange Binance holds Lithuanian crypto exchange and cryptocurrency depository wallet authorization from the middle of 2020. ECOVIS advised Binance during the whole incorporation and authorization process.
Types of cryptocurrency registration
- Crypto currency exchange operator is the company or the affiliate of another company exchanging cryptocurrency owned by the client for the commission fee
- Crypto currency depository wallet operator is the company or the affiliate of another company managing client cryptocurrency depository wallets
Activities of the cryptocurrency exchange and cryptocurrency depository wallet operators need to be separated from the licensed traditional finance activity (payment or electronic money institution, etc.). Nevertheless, licensed financial institutions are allowed to serve the fiat payments of the crypto registered companies and their clients creating an effective vehicle for crypto-fiat payments.
Coin and Exchange Offering ICO/IEO registration
Virtual Coin and Exchange Offering (ICO/IEO) and token distribution for the investors require separate authorization. Separate AML/KYC and other reporting requirements are established for the companies carrying out ICO/IEO activities and attracting financing through the public distribution of tokens and virtual coins to the investors. Lithuanian registered legal entities, as well as Lithuanian registered affiliates of EU and non-EU companies, are allowed to register and publicly distribute virtual coins offering them to the investors in the EU/EEA area.
Main AML/KYC requirements for cryptocurrency authorization
Lithuanian registered legal entities and affiliates of EU and non-EU companies can apply for the crypto authorization. Applicants need to have all necessary AML/KYC policies and implemented procedures necessary for the provision of cryptocurrency-related activities. Cryptocurrency exchange and cryptocurrency depository wallet operators are supervised by Lithuanian Financial Crime Investigation Unit – FIU. Members of the Management Board, as well as Ultimate Beneficial Owners (UBO’s) of the company, need to meet the requirements of impeccable reputation. There is no requirement forth the directors and members of the board to be Lithuanian/European residents.
Members of the Management Board, as well as Ultimate Beneficial Owners (UBO’s) of the company, need to meet the requirements of impeccable reputation.
General requirements for the entities engaged in cryptocurrency activities:
- Customer identification and verification
- Reporting to Lithuanian FIU
- Keeping records and client data
- Employment of Lithuanian AML officer
- Preparation and implementation of AML/KYC policies and internal control procedures
WARNING! “Ready-made” crypto companies frequently offered by non-Lithuanian intermediaries are not recommended because it is a red flag for the regulator. AML policies offered by the non-Lithuanian intermediaries usually are exactly the same, don’t reflect the client business model and don’t meet regulatory requirements. Signing notarial company share purchase agreement, change of articles and management may take even longer than the incorporation of the new company and proper authorization for crypto activity.
All new Lithuanian company incorporation and Crypto authorization processes (including company bank account opening) can be done fast online without the personal presence of the company shareholder(s) and director(s) in Lithuania.
ECOVIS experience in crypto authorization
ECOVIS ProventusLaw currently is the most experienced advisor in Lithuania advising crypto companies from early-stage start-ups to World’s biggest crypto exchange Binance. We provide a full set of cryptocurrency exchange, virtual currency depository wallet operator authorization services including company registration in Lithuania, preparation of all required AML/KYC policies and procedures. After the authorization process, ECOVIS provides bookkeeping and Lithuanian FIU compliance services for authorized entities. ECOVIS also assist with Bank and Electronic Money accounts opening for Crypto Companies.
Source: ECOVIS
