Lithuania, which is home to more than 260 fintech companies employing over 7,000 people, has seen substantial success in the crypto field over the last few years.
But the country isn’t stopping anytime soon. It is now implementing a new fintech strategy to establish itself as the number one fintech hub in Europe.
If you’re looking to obtain a crypto license in Lithuania VASP, now is the perfect time to do it.
Not sure how? This comprehensive article will unravel the application process, required documentation, and regulatory compliance standards, equipping you with the knowledge to secure your license with confidence.
Why should you obtain a crypto license in Lithuania?
Obtaining a Lithuanian crypto license comes with plenty of benefits.
First and foremost, it demonstrates your compliance with stringent anti-money laundering and terrorist financing regulations.
Since the licensing procedure requires a comprehensive scrutiny process, it signals to future clients and partners that your company follows best practices in security, data protection, and capital sufficiency.
By operating within a recognized regulatory framework, your business can attract investors looking for secure investment possibilities and expand its operations worldwide.
Crypto licensing framework in Lithuania for virtual asset service providers (VASPs)
Lithuania is the pioneer in establishing a comprehensive regulatory framework for VASPs in Europe.
Their Law on Electronic Money and Payment Institutions (LEMPI), amended in 2020, laid the groundwork for licensing and supervising crypto-related activities.
In general, Lithuania offers two types of crypto authorizations to VASP businesses that use virtual currencies:
- Crypto exchange license for trading cryptocurrencies and receiving a fee for every successful transaction.
- Crypto wallet and custodian services license for storing and managing cryptocurrencies of customers.
Lithuania brought VASPs under regulatory supervision by adopting the Fifth Anti-Money Laundering Directive (5AMLD) into national legislation. This directive is part of the European Union’s fight against money laundering and terrorist financing.
Right now, Lithuania is actively tightening regulations for VASPs through new legislation and collaboration between various government bodies.
Starting from December 30, 2024, Lithuania plans to implement the EU’s MiCA regulation (Markets in Crypto-Assets), ahead of the official July 2026 deadline.
The Bank of Lithuania will be in charge of licensing crypto-asset market participants, and it will collaborate with the Financial Crime Investigation Service (FCIS) to supervise money laundering and terrorist funding.
Going forward, only businesses that comply with both anti-money laundering and terrorist financing regulations, as well as service quality, will be eligible for a license.
The new framework emphasizes consumer protection and aligns VASPs with other financial market participants in terms of regulations.
Required documentation for crypto licensing
Before submitting a cryptocurrency licensing application, prepare the following documents:
- A validly signed passport from the nation of origin.
- A description of the company’s business model and activities in depth.
- A CV and an overview of each member’s expertise and education.
- Website address for the cryptocurrency services.
- A criminal background check (no older than three months) should be submitted by an owner, board member, final beneficiary (UBO), or AML officer.
- FCIS must obtain the details of all beneficial owners (UBOs).
Crypto licensing application process in Lithuania
To apply for crypto licensing in Lithuania, first you need to register a Limited Liability Company (UAB) with a minimum capital of €125,000 secured in a local bank account.
Make sure your UAB has a physical address, and then hire a senior manager as a money laundering reporting officer (MLRO). This person has to be a Lithuanian resident.
Afterwards, gather all the necessary documents, including company details, business plan, Know Your Customers/Anti Money Laundering (KYC/AML) policies, team resumes, and background checks for key personnel. Also, choose your license type based on your company activities.
Next, submit your application by heading to the Lithuanian FCIS portal and electronically submit your application and supporting documents. Don’t forget to pay the application fee, which varies depending on the license type.
Prepare yourself for a comprehensive review by the FCIS. They will review your application, business operations, and team expertise. At a prospective interview, be ready to respond to inquiries and provide clarification on details.
If your application is accepted, congratulations! You’ll receive your license, valid indefinitely. However, if it falls short, the FCIS will provide feedback for improvement, and you can re-apply later with a stronger case.
Regulatory compliance standard
The compliance starts from implementing robust AML and Combating the Financing of Terrorism (CFT) policies aligned with EU directives. To help you achieve this, appoint a qualified AML Compliance Officer to oversee procedures and reporting.
The Bank of Lithuania stated that in the crypto-asset sector, business tends to be unable to meet compliance requirements, including the failure to report suspicious monetary transactions to the FCIS.
Based on the information that has been gathered so far, you are strongly advised to comply with the KYC/AML policies to combat money laundering and financing of terrorism.
Summary
A Lithuanian crypto license is a significant badge of honor, demonstrating your commitment to industry standards and ethical behavior, ultimately cultivating trust and driving your business forward.
The process can be a little bit daunting, but don’t worry, Demire Inc. is here to help you obtain a crypto license and establish a VASP in no time.
