Lithuania is the most popular jurisdiction in the world for starting a cryptocurrency business. Gofaizen & Sherle provides professional assistance and support in remote obtainment of a Lithuanian crypto license with a guaranteed turnkey solution within 4 weeks and offers ready-made solution
In order to apply for a crypto license in Lithuania, you must have a limited liability company (UAB) to provide cryptocurrency exchange or storage services. According to new legislation, from since the 1st of November 2022 entrepreneurs wishing to start a crypto-business in Lithuania a share capital in the amount of 125 000 euros must be paid. Previously, the minimum share capital was 2 500 euros. Besides, the new law includes the formation of the special register with a list of crypto companies and the requirement for an exclusive AML officer. UAB (LLC) legal form allows conducting activities of custody wallet operator, as well as cryptocurrency exchange services.
It is important to know that the new Lithuanian legislation allows registering a crypto company WITHOUT an authorized capital contribution in ANY amount at ANY time, despite the requirement for of registered capital of 125,000 EUR.
Thus, unlike most other European jurisdictions for crypto businesses, Lithuania hass the fastest, most economical clear understanding of the future with some principles of the MiCa Directive already implemented.
The activities of virtual asset service providers in Lithuania fall under the next types of crypto licenses:
Both licenses are under the supervision of the Lithuanian Financial Crime Investigation Service (FCIS).
Exchange crypto to crypto
VASP Companies are authorized to offer exchange services between different types of virtual assets (utility tokens and coins). At the same time, the trade of security tokens is not allowed, since it requires an additional investment firm license
Exchange crypto to fiat and fiat to crypto
Crypto license in Lithuania allows its holder to offer the services for exchanging cryptocurrency for fiat currency and vice versa, meaning their customer can buy or sell available utility tokens for currencies such as US Dollar, Euro, British pound, etc
Storage crypto on behalf of the users
The VASP License allows its operator to store crypto assets on behalf of their customers through custodian wallets, meaning that operator can open wallet for the customer and private keys will be held by the VASP
Fiat storage and Exchange
VASP may accept fiat currency as a prepayment for services (generally, to exchange it for cryptocurrency). This prepaid amount in fiat currencies may be reflected in the Client's account as a "balance in fiat currencies". Even though custody of fiat funds is not allowed under the VASP license, operator can store the prepayment for indefinite amount of time, but it should be exchanged in the end to crypto
Informational services on the balance
Authorized VASP has the authority to manage and safeguard cryptocurrency depository wallets belonging to clients, and store and provide clients with information services on balances, and incoming and outgoing transactions
Send crypto to the 3rd party on behalf of the client
VASP may offer services to transfer cryptocurrency from the Client's wallet to a wallet specified by the Client by their order, being an intermediary. This service is a crypto alternative to wire transfers in fiat currency
The Lithuanian VASP can also conduct ICOs, in which an offer to buy its cryptocurrency is made for the first time through the VASP. It is important to note that under an ICO, VASP company is only allowed to issue utility tokens
VASPs have the right to use stacking as an additional tool to generate passive income from cryptocurrencies. Many blockchains use Proof-of-Stake consensus algorithms and their counterparts. This is a profitable alternative to classic cryptocurrency holding and is analogous to bank deposits in crypto. Yields can reach 10% per annum and higher
Choose the best package of services for obtaining a crypto activity license in Lithuania
The offer is made in accordance with the legislation of 1.11.2021
Full set up of the VASP business with all the necessary infrastructure, connection to KYC providers, local substance and Accounting services
Initial set up
Exhaustive set up of company infrastructure for the start of operational activity
Initial set up
Registration of the Virtual Asset Service Provider under the minimum regulatory requirements
Initial set up
After Lithuanian AML Law amendment in 2022 June 30 No. XIV-1374 new requirements for Lithuanian crypto license were introduced:
Other requirements, as reporting to FCIS (including obligatory reports based on transactions' value) and obligation to keep records with customer data, remain the same and include:
There’s no obligatory requirement to have local director for Lithuanian VASPs and therefore foreign individual can ensure secure control over the VASP’s activity
After 6-8 weeks company will be fully registered as a Virtual Asset Service Provider and 2-3 weeks will be required extra to become fully operative and open a Bank account
Result: All the needed documents for the process initiation are collected.
Collecting preliminary set of the documents from the Client side:
Result: The company is registered as the Virtual Asset Service Provider with the share capital of 125 000 EUR
Result: The company has all the infrastructure settled for the activity of VASP as required by the regulation as well as needed for conducting the operating activity within the legal framework of Lithuania
Result: The company has an operational corporate account under crypto with connected accounting service
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The taxation of transactions in virtual currency depends on the nature of the transactions. There is no direct tax if the token is sold or purchased similarly to a security, investment or other currency
Payment of goods or services in virtual currency does not exempt from VAT. Sales are considered normal/regular, even if payments for goods and services are received in virtual currencies. For accounting purposes, the transaction must have a value in euros and VAT rules are applied as for transactions with fiat currencies used. If VAT is applied to payments in fiat currency, it should also be applied to payments in virtual currency. VAT declarations must be submitted in euros and VAT should be paid or returned in euros
Register of licensed crypto companies is kept by Lithuania Centre of Register, however activities related to virtual assets are supervised by Financial Crime Investigation Service (FCIS, in Lithuanian: Finansinių nusikaltimų tyrimo tarnyba or FNTT) - law enforcement agency under the Ministry of the Interior, which is part of Financial Intelligence Units' international network. FCIS activities are aimed to prevention of money laundering, terrorist financing and violation of sanctions. Lithuanian FIU is also responsible for investigations related to financial crime, including VAT-related and other tax machinations, money laundering, and illegal receipt or use of financial assistance from the EU. FCIS is actively participating in National Crime Prevention and Combating Corruption Program and constantly developing methods to engage society in the fight against financial crime. This authority regularly issues orders describing certain aspects of legislation in the AML/CTF field, which are directly applicable to the relevant obliged entities.
Supervision under crypto companies is primarily performed by FCIS through targeted inspections which are planned 1 year in advance. FCIS is publishing list of companies being supervised this way at the beginning of the year, however unplanned targeted supervision also possible in certain circumstances.
In 2023 FCIS also introduced regular reporting for VASPs, which shall be performed annually. Such approach certainly will affect market's transparency and allows performance of more effective supervisory approach.
Lithuanian AML law requires from VASPs to appoint appoint AML Officer (leading employee) who would organize the implementation of money laundering and/or terrorist financing prevention measures set out in the AML law and cooperate with the FCIS. In addition, when the company is managed by a board, it must appoint a board member to organize the implementation of money laundering and/or terrorist financing prevention measures. The appointment of such employees and board members must be notified in writing to the FCIS no later than 7 working days after their appointment or replacement.
AML Officer appointed shall have the appropriate education, work experience, and skills necessary for implementation of risk-based approach inside the company. In addition, the person's reputation has great importance here. After new law came into force, AML Officer appointed to crypto company shall be permanent tax resident of Lithuania and restriction for appointment to more than one VASP applies.
AML Officer performs the following functions in the company:
There's many supervisory authorities (e.g. Bank of Lithuania, Chambers of Notaries, Auditors, etc.), which are responsible for imposing of fines to obliged entities, but for VASPs only FCIS may perform inspections, make orders for elimination of deficiencies and impose fines.
Lithuanian AML law establishes the following measures may be implemented for the purpose of ensuring fulfillment of regulation by VASP:
From the responsibility’s point of view Lithuanian AML law defines gross and systematic violations, which have more significant importance and more strict regulatory measures. Amount of fine may be imposed depends on the company’s annual income and may grow up to 10% of the gross annual income received in the course of licensed activity.
There are several advantages:
The company holding a crypto license in Lithuania allows to conduct the following types of activities:
The total duration for registering a company and obtaining permission to operate in Lithuania is approximately 6-8 weeks. To obtain a crypto license in Lithuania, several steps must be taken.
The first step to obtaining a crypto license in Lithuania is to create or purchase a company in Lithuania. To register a company there, you must first register the company with a standard authorized capital of €2,500. After that, you open a deposit account, and one of the options for increasing the authorized capital is to deposit an additional €122,500. Then, a report is taken, and the capital is registered for €125,000 in the commercial register. This process usually takes 3-4 weeks. If you want to increase the authorized capital non-monetary, completing this process may take up to 3 weeks extra time.
Registering a company with a standard authorized capital of €2,500 takes 2-3 weeks. Then, one week is spent increasing the authorized capital to €125,000, followed by another week to register the company as a virtual asset provider. After that, the infrastructure is set up, new procedures are written, and a physical office is searched for, which takes another approximately two weeks. Therefore, in general, this process takes about 6-8 weeks.
Lithuania's virtual currency deposit service providers and exchange companies must implement measures to prevent money laundering and terrorism financing. These measures include client and recipient identification, continuous monitoring of customer relationships, and verification of client and recipient identities using reliable and independent sources. Operators must also promptly notify the Financial Crime Investigation Service (FCIS) of suspicious transactions and conduct detailed examinations of complex or extensive transactions. Internal control policies and procedures must be established, and staff should be trained to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
Operators must identify and verify the client and recipient's identity before starting a business relationship or conducting a single virtual currency exchange transaction equal to or greater than €700 or its equivalent in foreign/virtual currency. A risk-based approach uses standard, enhanced, and simplified identification procedures. If operators are unable to meet the requirements, they must refuse cooperation. When a threat of money laundering or terrorism financing is detected, operators must report the suspicious transaction to the FCIS.