As of 1 November 2022, stricter requirements for the activities of virtual currency exchange operators and depository virtual currency monetary operators (VASP) entered into force in Lithuania. These requirements are provided by the amendment to the Money Laundering and Terrorist Financing Prevention Law of the Republic of Lithuania (PPTPF Law).
Among the new requirements, minimum operational requirements have been established, which obligate the following from all VASPs seeking to operate in Lithuania:
- registered authorised capital of not less than EUR 125,000 when choosing to establish a legal entity in the form of a joint-stock company or a closed joint-stock company
- to appoint a senior manager who is a permanent resident of Lithuania
- to ensure that the company’s AML officer works at only one VASP
- to carry out part of the activities in Lithuania
From 1 January 2023, VASPs that do not meet the above requirements no longer have the right to operate in Lithuania.
As of 1 February 2023, it is possible to check which VASPs meet the requirements of the Law on AML – the State Enterprise Centre of Registers of the Republic of Lithuania publicly publishes a list of custodian virtual currency wallet operators and a list of virtual currency exchange operators (currently, only the versions in Lithuanian are available). Only legal entities that comply with the above-mentioned share capital requirements are included in the lists. The lists indicate the VASP name, address, legal entity code, date of the start of activity, e-mail and website address.
By the end of 2022, it was estimated that about 900 VASPs were registered in Lithuania. Currently, there are more than 200 depository virtual currency wallet operators and more than 200 virtual currency exchange operators registered in Lithuania. The lists are provided separately, but it should be noted that the majority of legal entities on the lists carry out both activities. We are glad that these stricter requirements helped to effectively distinguish which market participants are ready to operate and aim to further expand their activities in Lithuania.
FCIS is enhancing its supervision of the crypto-asset sector
On 27 January 2023, the FCIS director approved Order No. V-16, by which all VASPs registered in Lithuania are required to regularly submit to the FCIS a specified amount of data related to the prevention of money laundering and terrorist financing. The information must be submitted to FCIS once a year, by 31 March of each year via the FCIS information system. Starting this year, VASPs will have to provide statistical information on the customer base served, their operations, geographical distribution, internal control measures implemented by VASPs themselves, etc. The detailed information submission form is available here (currently, only a version in Lithuanian is available).
The crypto asset sector in Lithuania has experienced unprecedented growth in recent years but without proper legal oversight. Such rapid expansion of the industry has also brought some negative consequences, including increased risks of money laundering and terrorism financing, evasion of international sanctions, a surge in financial crime, inadequate consumer protection and other. Consequently, the recent tightening of the requirements for crypto-asset sector is an important and welcome development, particularly in anticipation of the impending Markets in Crypto Assets (MiCA) regulation.