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Crypto license in Lithuania

Lithuania is a prime global destination for launching crypto ventures.
One of our offices is located in Lithuania, and Fintech Simple ensures a Lithuanian crypto license in as little as 4 weeks through remote processes. We offer ready-made companies and provide comprehensive fintech and legal support for all inquiries. We are experts in the field.

UNLOCKING THE DOORS TO LITHUANIA’S CRYPTO-LICENSING LANDSCAPE

To initiate a cryptocurrency business in Lithuania, you're required to establish a Limited Liability Company (UAB).

As of November 1, 2022, there has been a substantial shift in the legislation governing the sector. Entrepreneurs are now mandated to allocate a share capital of 125,000 EUR, a substantial hike from the previous requirement of 2,500 EUR.

This development is in line with the formation of Lithuania's specialized crypto license register, which meticulously documents all the crypto enterprises operating within its jurisdiction.

An integral part of the evolving corporate structure is the appointment of an exclusive Anti-Money Laundering (AML) officer.

This role is not just an optional addition but a mandatory requirement, highlighting Lithuania's commitment to upholding rigorous compliance measures and risk management protocols. Interestingly, while the share capital requirement may appear daunting, Lithuanian legislation provides an unparalleled leeway to entrepreneurs.

Companies can be registered for a crypto license without an immediate contribution to the capital, thereby bestowing upon them a remarkable degree of financial adaptability.

IN LITHUANIA, THE LICENSING LANDSCAPE FOR VIRTUAL ASSET SERVICE PROVIDES IS BIFURCATED INTO TWO PRIMARY CATEGORIES

Cryptocurrency Exchange License

This license authorizes companies to act as intermediaries in the exchange of FIAT currencies for cryptocurrencies, and vice versa, as well as in the exchange between different cryptocurrencies. Companies operating under this license are permitted to levy a commission fee for the services they provide

Cryptocurrency Wallet License

Companies with this license are enabled to store cryptocurrencies and encrypted private keys on behalf of their clients in a secured environment

Both of these licenses come under the stringent regulatory scrutiny of the Lithuanian Financial Crime Investigation Service (FCIS). Companies are mandated to adhere to an extensive set of legal requirements and obligations.

CoMPANIES REGISTERED IN LITHUANIA AS VIRTUAL ASSET SERVICE PROVIDES (VASP) CAN EXPECT THE FOLLOWING ARRAY OF CAPABILITIES UNDER THE CURRENT LEGAL FRAMEWORK

Virtual Asset Exchange

Legal entities with the requisite license may facilitate the exchange of various types of virtual assets, excluding security tokens, which require an additional investment firm license

Cryptocurrency and Fiat Conversion

License holders are authorized to offer services for exchanging cryptocurrency for fiat currency and vice versa

Cryptocurrency Custody

Companies can store cryptocurrency assets on behalf of their clients, with the private keys for the wallets being managed by the VASP

Fiat Prepayment Option

VASP may accept fiat currency as an advance payment for services, intended for subsequent conversion into cryptocurrency

Informational Services

Provision of services for managing and safeguarding cryptocurrency wallets, as well as informational services about client balances and transactions

Cross-Border Operations Capability

Possession of a license enables international cryptocurrency operations based on European regulatory standard

Virtual Asset Transfer

Execution of cryptocurrency transfers from the client's wallet to a third-party wallet as specified by the client

Initial Coin Offerings (ICO)

Within the context of an ICO, companies are allowed to issue utility tokens exclusively

Income Generation Through Staking

Utilization of staking as a method for passive income, analogous to traditional financial institution deposits

Compliance with Antitrust Laws

The capability to operate in compliance with national and European antitrust regulations

This list illustrates the comprehensive opportunities that open up for holders of relevant licenses in Lithuania. It is imperative not to overlook the legal obligations and responsibilities that arise in the course of activities in this sphere.

CHOOSE YOUR PREFERRED SERVICE PACKAGE FOR OBTAINING A CRYPTO LICENSE IN LITHUANIA

Starter kit
Securing official status for the Virtual Asset Service Provider
in accordance with essential legal mandates. This involves
meeting the baseline regulatory criteria required for formal
recognition and operation within the industry.
€ 4200
  • Comprehensive Company Formation and Legal Setup
  • Registration of Required Share Capital (EUR 125,000)
  • Obtaining and Validating Apostilled Corporate Documents
  • Development and Implementation of AML/KYC Policies
  • Specialized Recruitment for an Experienced, Local AML/KYC Officer
  • Local Office Address Registration for One Year
  • Enrollment as a VASP in the Commercial Registry
  • Initiation of VASP Activity Registration with FCIS/FNTT
Enhanced Package
Offers a thorough setup of your company's infrastructure, priming you for immediate operational activity as a Virtual Asset Service Provider (VASP). It covers essential services ranging from comprehensive company formation and legal compliance to the integration of technology solutions and specialized personnel recruitment.
€ 7800
  • Comprehensive Company Formation and Legal Setup
  • Registration of Required Share Capital (EUR 125,000)
  • Obtaining and Validating Apostilled Corporate Documents
  • Development and Implementation of AML/KYC Policies
  • Specialized Recruitment for an Experienced, Local AML/KYC Officer
  • Local Office Address Registration for One Year
  • Enrollment as a VASP in the Commercial Registry
  • Initiation of VASP Activity Registration with FCIS/FNTT
Comprehensive Suite
Complete setup of a VASP business, including all essential infrastructure. This package covers KYC integration for regulatory compliance, establishing a local office to meet legal requirements, and full accounting services for financial transparency.
€ 9900
  • Comprehensive Company Formation and Legal Setup
  • Registration of Required Share Capital (EUR 125,000)
  • Obtaining and Validating Apostilled Corporate Documents
  • Development and Implementation of AML/KYC Policies
  • Specialized Recruitment for an Experienced, Local AML/KYC Officer
  • Local Office Address Registration for One Year
  • Enrollment as a VASP in the Commercial Registry
  • Initiation of VASP Activity Registration with FCIS/FNTT
  • Assistance in Securing Suitable Office Space
  • Guidance in Opening a Crypto-Operational Bank Account
  • Integration with KYC/KYT Solution Providers
  • Comprehensive Accounting Services Tailored for VASPs
  • Expert Legal Opinion on Compliance
  • Ongoing Regulatory Compliance Monitoring
  • Crisis Management and Risk Assessment
Purchase of a Ready-Made Company with Crypto License in Lithuania

Alternative to Package Services

If you are looking for a quick and efficient way to start a cryptocurrency business in Lithuania, consider the option of acquiring an already registered company with an existing crypto license. This option significantly accelerates the process of launching your enterprise, bypassing the stages of registration and licensing.

  • Upon request
  • 2-3 weeks

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Criteria for obtaining a cryptocurrency license in lithuania

Following an amendment to Lithuania's AML legislation on June 30, 2022 (No. XIV-1374), several new criteria were established for obtaining a cryptocurrency license:

  • A minimum registered share capital of €125,000 is necessary, although no continual monitoring of these funds is required, and solutions are available that don't require the actual contribution of capital
  • The appointment of a dedicated Anti-Money Laundering (AML) Officer is mandatory. This individual must be a permanent tax resident in Lithuania and receive a pre-agreed salary from the Virtual Asset Service Provider (VASP)
  • There is no requirement for a locally-based director, enabling foreign individuals to maintain secure control over the VASP's operations
  • Companies must adhere to reputational requirements; VASP senior management, shareholders, and beneficial owners should have no valid criminal records
  • An emphasis on the local market is expected, as the licensed crypto company must undertake essential activities within Lithuania
  • The company is prohibited from opening anonymous accounts and must adhere to lowered identification limits for clients (€700)
  • Ongoing obligations, including FCIS reporting based on transaction value and customer data retention, remain consistent
  • Policies for preventing money laundering and terrorist financing must be established
  • Implementation of a risk-based approach during the licensed activity is mandatory
  • Mandatory reporting of suspicious transactions and particular operations must be maintained
  • Compliance with international sanctions regimes is necessary
  • An obligation to identify customers and retain their data exists

This list illustrates the comprehensive opportunities that open up for holders of relevant licenses in Lithuania. It is imperative not to overlook the legal obligations and responsibilities that arise in the course of activities in this sphere.

PROCEDURE FOR OBTAINING A CRYPTO LICENSE IN LITHUANIA: TIMELINE AND OPERATIONAL SETUP

Step 1
Initial Assessment and Document Collection
1-2 days
  • Gathering crucial documents, such as a valid passport, residential addresses, and customer profiles for all project participants
  • Defining the business model, company name, and scope
  • Finalizing budgets and setting forth next steps in a Power of Attorney (PoA) drafted by our operations department
1-2 days

All essential documents and preliminary plans are in place

Outcome
Step 2
Company Formation and Regulatory Registration
3-4 weeks
  • Sworn translations of all provided documents into Lithuanian
  • Assisting with opening an initial bank account and transferring the minimum share capital
  • Legal documentation including Articles of Association prepared in line with your corporate structure
  • Notarizing and submitting all required papers to the commercial registry
  • Increasing share capital and updating Articles of Association accordingly
  • Company registration within the VASP activity code
3-4 weeks

Company registered as a VASP with €125,000 share capital

Outcome
Step 3
Acquiring the Crypto License
2-3 weeks
  • Tailoring your company's Anti-Money Laundering (AML) and Know Your Customer (KYC) policies
  • Assistance in finding and renting suitable business premises
  • Legal aid for setting up KYC/KYT software in line with Lithuanian laws
  • Recruiting a qualified AML/KYC officer, followed by training and integration
2-3 weeks

All regulatory compliance measures are met for VASP activities

Outcome
Step 4
Operational Setup and Accounting
2-4 weeks
  • Banking solutions aligned with your AML policies and risk appetites
  • Full guidance through the bank account opening process
  • Designing accounting procedures for your crypto activities
  • Setting up accounting software and ongoing monthly accounting services
2-4 weeks

Company bank accounts are operational, and accounting services are in place

Outcome

LITHUANIAN CRYPTOCURRENCY TAXATION: A COMPREHENSIVE GUIDE CORPORATE TAXATION FOR CRYPTO COMPANIES IN LITHUANIA

VAT Exemptions

Unlike traditional financial services, virtual currency exchanges and wallet services are not considered financial services, making them exempt from Value Added Tax (VAT)

VAT on Crypto Payments

If your company offers services or products that are paid for in cryptocurrencies, standard VAT rules will still apply. Therefore, these transactions must be converted to euros for accounting purposes

Corporate Profit Tax

Typically, profits generated by a cryptocurrency company are taxed at a rate of 15%. However, small enterprises with fewer than ten employees and a gross annual income under €300,000 are eligible for a reduced corporate tax rate ranging between 0% and 5%

Withholding Tax on Distributed Profits

Dividends paid by the company are subject to a 15% withholding tax

individual TAXATION ON CRYPTOcurrency transactions IN LITHUANIA

Nature of the Transaction

The way in which transactions involving cryptocurrencies are taxed depends on the nature of the transaction. For instance, buying or selling a token in a manner similar to securities or other forms of investment does not incur direct tax

VAT on Goods and Services

Paying for goods and services with virtual currencies does not exempt you from VAT. These sales are considered regular transactions and must be accounted for in euros, similar to transactions conducted in fiat currencies. VAT compliance is required whether payment is made in fiat or virtual currency

VAT Declarations

When handling transactions involving cryptocurrencies, it's crucial to remember that VAT declarations must be made in euros. Regardless of the currency in which the transaction was completed, VAT should be paid or reclaimed in euros

By understanding the tax landscape for cryptocurrency businesses and transactions in Lithuania, you can better navigate the financial implications of your operations, making for a more secure and profitable venture

understanding FCIS (FNTT): THE REGULATORY AUTHORITU
OVERSEEING VASPS IN LITHUANIA

The Financial Crime Investigation Service (FCIS, or Finansinių nusikaltimų tyrimo tarnyba - FNTT in Lithuanian) is a law enforcement agency under the Lithuanian Ministry of the Interior. As a member of the international Financial Intelligence Units' network, the FCIS is tasked with various responsibilities aimed at the prevention of financial crimes.

Specifically, the agency focuses on:

Preventing Money Laundering and Terrorist Financing

FCIS's activities are primarily aimed at combating these illegal actions

Enforcement Against Financial Crimes

This includes investigations into VAT-related fraud, other tax manipulations, and unauthorized receipt or usage of EU financial aid

Policy and Regulation

FCIS actively contributes to the National Crime Prevention and Combating Corruption Program and continually evolves methods to involve society in combating financial crimes

Legislative Interpretation

FCIS issues orders to clarify various legislative aspects in the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CTF) fields, directly impacting obligated entities

Specifically, the agency focuses on:

Targeted Inspections

FCIS primarily monitors crypto companies through planned inspections, usually scheduled a year in advance. An annual list of companies under supervision is made public

Unplanned Inspections

While scheduled reviews are the norm, unexpected inspections can occur under certain conditions, allowing FCIS to maintain vigilant oversight

Annual Reporting

In 2023, FCIS introduced a mandatory annual reporting requirement for Virtual Asset Service Providers (VASPs). This new procedure aims to increase transparency within the sector and foster a more effective regulatory environment

Understanding the role and responsibilities of FCIS in Lithuania can help VASPs operate within a legal and secure framework, minimizing risks while maximizing compliance

COMPREHENSIVE GUIDE TO THE ROLE AND RESPONSIBILITIES OF AN AML OFFICER IN LITHUANIAN VASPS

Legal Requirement and Qualifications

In Lithuania, Virtual Asset Service Providers (VASPs) are legally required to appoint an Anti-Money Laundering (AML) Officer. This leading employee is responsible for organizing and implementing AML and Counter-Terrorist Financing (CTF) measures as stipulated by Lithuanian AML laws.

Additionally, if the company is board-managed, a board member must also be designated to oversee these preventive measures. Notification of such appointments should be submitted in writing to the Financial Crime Investigation Service (FCIS) within seven working days from the date of appointment or replacement.

The AML Officer must possess:
• Relevant educational qualifications;
• Adequate professional experience;
• Necessary skills to implement a risk-based approach.

Moreover, the officer's reputation is of utmost importance, and as of the recent changes in law, the appointed AML Officer must be a permanent tax resident of Lithuania. There is also a restriction that one cannot serve as an AML Officer for more than one VASP.

Core Functions of an AML Officer

Policy Development and Oversight

Ensure that AML/CFT and sanctions policies are adequate, proportionate, and aligned with the company's risk profile. This involves periodic updates and revisions

Reporting and Communication

Periodically report activities to the CEO and provide comprehensive and timely data regarding the company's ML/TF risks and compliance status

Issue Escalation

Inform the CEO of any significant issues related to AML/CFT and recommend appropriate corrective actions

Monitoring and Verification

Continuously monitor and validate the company's adherence to internal policies and regulatory requirements

Employee Training and Advice

Offer guidance and training to other staff on AML/CTF and sanctions, thereby fostering a culture of compliance within the company

Internal Investigations

Review and analyze data on received internal alerts to decide whether activities are justified or suspicious

Reporting Obligations

Prepare and submit necessary reports like Suspicious Activity Reports (SAR) and Currency Transaction Reports (CTR) as required by law

Risk Assessment

Develop and maintain a comprehensive risk assessment at both company-wide and individual transaction levels to proactively manage ML/TF risks

Resource Evaluation

Alert the CEO if the human and technical resources allocated for AML/CFT are inadequate and need reinforcement

High-Risk Approvals

Provide consent for establishing or continuing business relationships with Politically Exposed Persons (PEP), correspondent relationships, and other high-risk customers

Coordination with Regulatory Authorities

Act as the point of contact between the company and FCIS, ensuring smooth communication and cooperation

Additional Functions

Perform any other duties as stipulated under the applicable law, internal policies, or job description

The Increasing Importance of AML Officers in VASPs

As the regulatory environment around virtual assets becomes more robust, the role of the AML Officer in VASPs has never been more critical.

With stringent laws in place, it is essential for companies to invest in qualified and capable AML Officers who can not only fulfill the compliance needs but also contribute to the overall risk management strategies of the firm.

Therefore, an AML Officer is not just a legal requirement but a crucial asset in safeguarding the company against the financial and reputational risks associated with money laundering and terrorist financing.

FAQ

What is the governing body for crypto licensing in Lithuania?

The Financial Crime Investigation Service (FCIS), also known locally as FNTT, is responsible for issuing cryptocurrency licenses in Lithuania.

How long is the license valid?

Licenses for cryptocurrency activities in Lithuania are issued for an indefinite period.

Can foreign entities apply for a Lithuanian crypto license?

Yes, companies registered outside Lithuania can apply for a license, although there may be additional regulatory complexities.

Do company directors need to be Lithuanian residents?

No, a director does not need to be a resident of Lithuania.

What are the major advantages of getting a crypto license in Lithuania?

Lithuania offers a stable regulatory environment, tax advantages, ease of doing business, and simplified user onboarding, among other benefits.

How much is the required authorized capital?

A share capital of €125,000 is required to obtain the license.

Can this capital be in the form of cryptocurrency?

Yes, capital can be deposited in cryptocurrency following an appraisal process.

What is the estimated timeline for obtaining the license?

The process typically takes around 6-8 weeks.

Are there any mandatory audit requirements for crypto companies?

No, there are no obligatory financial audits, although regulatory checks may occur.

What types of activities can a licensed company conduct?

Activities include fiat to crypto exchange, crypto-to-crypto exchange, custodial services, ICOs, and remittance services, among others.

How is a Lithuanian crypto company taxed?

Companies face a 15% corporate tax, with potential reductions for smaller companies.

Is VAT applicable to crypto transactions?

No, VAT does not apply to financial transactions, including those involving cryptocurrencies.

What AML and CTF measures must be in place?

Companies must implement client identification, transaction monitoring, and reporting mechanisms to combat money laundering and terrorism financing.

Is a physical office required in Lithuania?

No, a physical office is not a mandatory requirement for obtaining a crypto license.

Is it possible to register authorized capital without depositing the actual amount?

No, the full amount of €125,000 must be deposited.

Can the capital be increased non-monetarily?

Yes, an increase in authorized capital can be non-monetary, but it will require additional time for appraisal.

Are there any reporting requirements?

Companies must notify the FCIS of any suspicious transactions and maintain internal control policies.

What's the minimum transaction amount for AML checks?

Identification is needed for transactions equal to or greater than €700.

Do I need a Lithuanian bank account?

No, a Lithuanian bank account is not mandatory, although you do need an account to deposit the authorized capital if it's done monetarily.

Is it possible to use foreign banks for the deposit?

Yes, foreign banks can be used for depositing the required authorized capital.

How do you register the company initially?

Initial registration involves a €2,500 authorized capital, a legal address, and a short business description, among other requirements.

Is the regulation in line with EU policies?

Yes, Lithuania's crypto regulation is aligned with the European Union's MiCa regulations.

Are there restrictions on the types of tokens for ICOs?

No, but only Utility Tokens are allowed for ICOs under the Lithuanian license.

What are the reputational advantages of a Lithuanian crypto license??

A Lithuanian license is generally well-regarded, making it easier to open bank accounts and partner with third parties.

How flexible are verification requirements for global user onboarding?

Lithuania has simplified verification requirements that facilitate easier global user onboarding.

Can the license be revoked?

Yes, non-compliance with regulatory requirements can lead to license revocation.

Is it required to maintain a local legal address?

Yes, a legal address in Lithuania is required for at least one year.

Are there any exemptions for small crypto companies?

Smaller companies may qualify for a reduced 5% corporate tax rate under certain conditions.

What are the steps after obtaining a license?

Post-licensing, companies should focus on setting up infrastructure, writing new procedures, and potentially seeking a physical office space.

Is it advisable to consult with local experts?

Consulting with local regulatory and legal experts is highly recommended for navigating the licensing process effectively.

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