On 26 July, the Bank of Lithuania (“BoL”) issued a letter of expectations for financial market participants operating and planning to operate in the crypto-asset sector. This letter updates BoL stance on crypto-assets and initial token offerings and also aligns with the recent implementation of Titles III and IV of the EU Markets in Crypto Assets Regulation (“MiCA”). Additionally, the new Republic of Lithuania Law on Crypto-asset Markets (“Law“) came into force on 25 July.

Here are key considerations from these documents:

•  As of 30 June 2024, the issuance and placement of asset-referenced and e-money tokens are permitted only after meeting MiCA requirements and obtaining whitepaper approval.

• BoL emphasizes that financial market participants must carefully consider the increased risks of money laundering and terrorist financing associated with companies working in the crypto industry. Participants should ensure compliance with relevant regulations and apply adequate preventive measures before servicing crypto clients.

• The Law defines BoL supervisory rights and responsibilities. Applicants seeking a crypto-asset service provider license must provide complete and accurate information and fully cooperate with BoL to be granted a license. BoL takes a critical view of the combination of an electronic money institution or payment institution license with a cryptocurrency service provider license within a single legal entity.

• Once licensed under MiCA, crypto-asset service providers are required to submit quarterly supervisory reports to BoL and have their financial statements audited. The Law sets that crypto-asset service providers’ managers include the head of the legal entity, their deputy, and board and supervisory council members.

The Law provides a transitional period for existing virtual currency exchange operators and depository virtual currency wallet operators in Lithuania to comply with MiCA. From 30 December 2024 to 1 June 2025, application documents can be submitted to the BoL to obtain a crypto-asset service provider license under MiCA. After 1 June 2025, unlicensed operators will lose the right to provide crypto-asset services.

Additionally, a new amendment to the Republic of Lithuania Law on the Prevention of Money Laundering mandates that the existing operators must submit proof to the Financial Crime Investigation Service demonstrating compliance with the requirement to maintain a minimum equity of 125 000 EUR from 1 August 2024. The required documentation must be submitted by 31 August 2024.

If you need assistance with the licensing process or have any questions about these changes, please contact us at RESPONSE Legal. 📢