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Lithuania Proposes Legislative Changes For Stricter Crypto Regulation

 


To combat money laundering and the evasion of financial sanctions by Russian oligarchs, the Eastern European country of Lithuania is now planning stricter regulation of cryptocurrencies.


As the Lithuanian Ministry of Finance announced on Wednesday , several ministries have already spoken out in favor of tightening measures to combat money laundering (AML) and the fight against terrorist financing in connection with cryptocurrencies. If the planned amendments to the law are passed by Parliament, the obligations to collect and disclose customer information would be significantly expanded in the future.


The conditions would also become stricter for crypto exchanges, so from January 1, 2023 they would have to register as a corporation with a share capital of at least 125,000 euros. The management of the trading platforms would also have to have their permanent residence in Lithuania.


The Ministry of Finance cites the rapid growth of the crypto industry and the general global political situation, which is particularly precarious in Eastern Europe, as the reason for these significantly stricter regulations:


“Nuanced regulation of crypto service providers is all the more important given international regulatory trends and the geopolitical situation in our region, as many countries have imposed financial sanctions on Russia and Belarus.”

Finance Minister Gintarė Skaistė stated in the announcement that the steps taken are in line with the European Union's (EU) planned crypto regulatory measures. In this regard, the letter also points out that the crypto industry in Lithuania has recently grown rapidly after neighboring Estonia tightened the thumbscrews for the industry a few months ago. While only 8 crypto companies settled in Lithuania in 2020, 188 new companies were added in 2021 alone.


A spokesman for the Treasury Department told Cointelegraph that the change in law is not intended to close the door on international crypto companies, but to ensure that they have solid business models and comply with applicable regulations:


"The new requirement for crypto companies to have their management permanently resident in Lithuania is intended to ensure better communication with the relevant regulators and better understanding of the domestic market."

As the spokesman also emphasizes, the planned changes still have to be approved by Parliament. Accordingly, these could come into force on November 1, 2022 at the earliest, and most of the draft would only apply from January 1, 2023.

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