The government in Vilnius has approved amendments introducing more stringent regulations for the country’s growing crypto space. The legislation is aimed at managing risks associated with crypto assets and preventing Russian attempts to circumvent Western sanctions imposed over the war in Ukraine.
Lithuanian Authorities to Tighten Rules for Crypto Industry
Lithuania is preparing to revise its Law on Prevention of Money Laundering and Terrorist Financing with the stated goal of ensuring greater transparency and sustainable development for its cryptocurrency sector. This week, the government approved amendments that the small Baltic nation plans to adopt before the upcoming EU regulations.
The new provisions have been prepared by the Ministry of Finance, the Bank of Lithuania, the Financial Crime Investigation Service, the Ministry of Interior, and the Lithuanian Money Laundering Prevention Competence Center. Their main purpose is to further regulate the operations of crypto service providers.
Finance Minister Gintarė Skaistė was quoted by her department as stating that the rapid growth of the crypto market and the emergence of new products require additional attention from the responsible authorities in managing risks, especially those related to money laundering and terrorist financing threats. She elaborated:
Against this background, we are taking proactive steps to strengthen regulation at national level in preparation for subsequent decisions at EU level.
The draft law, which should be submitted to the Lithuanian parliament during the current session and enforced this year, is expected to introduce more detailed rules for customer identification and impose a ban on the opening of anonymous accounts. It will also increase the authorized capital required from service providers to €125,000.
Only permanent residents of Lithuania will be allowed to manage companies dealing with cryptocurrencies. Lithuanian regulators also want to make sure that these entities do not provide services or operate exclusively in other jurisdictions. The full list of registered operators of crypto exchange and custody platforms will be made public from Feb. 1, 2023.
Lithuania is also updating its regulations in response to the recent events in the region, in particular, the ongoing military conflict in Ukraine. “The relevance of the proposals is strengthened by today’s geopolitical environment — we must ensure that no attempt is made to circumvent Western sanctions on Russia by using crypto assets,” Minister Skaistė emphasized.
Since Estonia tightened its crypto regulations, Lithuania has seen a rapid growth in the number of crypto companies starting business in the country. Only eight such entities were established in the whole of 2020 while in 2021, 188 new firms were registered, followed by another 40 in the first months of this year. Over 250 crypto service providers are currently operating in Lithuania, the finance ministry revealed.
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Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.
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