Bank of Lithuania

A crypto-asset is a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology (DLT) or similar technology. As of now, the Bank of Lithuania is not granting authorisations to companies issuing crypto-assets or providing crypto-asset services in Lithuania. While these companies are not supervised by the Bank of Lithuania, the Lithuanian Financial Crime Investigation Service supervises the market to ensure that certain requirements in the field of anti-money laundering and combating the financing of terrorism (AML/CFT) are met.

Regulation (EU) 2023/1114 (the Markets in Crypto-Assets Regulation – MiCAR) establishes a comprehensive European framework for crypto-assets and related services by setting out the requirements for persons who issue crypto-asset tokens (issuers of asset-referenced tokens (ARTs), e-money tokens (EMTs) and other crypto-assets) and for persons who provide services with such tokens (crypto-asset service providers). This framework addresses key risks which have emerged in crypto-asset markets and are not currently addressed by existing financial services legislation. The requirements for issuers of EMTs and ARTs shall apply from 30 June 2024. The entirety of MiCAR shall come into application on 30 December 2024.

Lithuanian authorities are actively preparing for the implementation of MiCAR. As a national competent authority, the Bank of Lithuania will be responsible for licensing and supervising crypto-asset market participants and, together with the Financial Crime Investigation Service, will share responsibility for their supervision in the field of AML/CFT. In light of emerging risks, only those companies that are transparent, honest, have a high level of integrity and pay due attention to compliance, AML/CFT requirements and quality of services will be eligible for a licence.

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Important definitions (as defined by MiCAR)

Crypto-asset service provider – a legal person or other undertaking whose occupation or business involves the provision of one or more crypto-asset services to clients on a professional basis, and that is accordingly allowed to provide crypto-asset services.

tekstas

Crypto-asset services under MiCAR Article 3(16)

Issuer of electronic money tokens or ‘e-money tokens’ – an issuer that issues a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency.

Issuer of asset-referenced tokens – an issuer that issues a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies.

Issuer of other crypto-assets – an issuer that issues a type of crypto-asset other than asset-referenced tokens or e-money tokens.


Timeline

  • March 2018: the European Commission (EC) adopted the FinTech action plan.
  • December 2019: the Lithuanian Parliament passed amendments to include certain crypto-asset-related entities into AML/CFT regime.
  • December 2019: the EC started a public consultation on an EU framework for markets in crypto-assets.
  • September 2020: the EC published a Digital Finance Strategy for the EU, also forming a legislative proposal on crypto-assets (including MiCAR).
  • June 2022: the Lithuanian Parliament strengthened the requirements for crypto-asset related entities.
  • June 2023: the publication of MiCAR in the Official Journal.
  • June 2024: MiCAR Titles III and IV (regarding issuers of ARTs and EMTs) to enter into application.
  • December 2024: MiCAR Titles I, II, V, VI, VII to enter into application.
  • December 2024: the EC should present a report on market developments and an appropriate legislative proposal (including requirements for NFTs, decentralised finance (DeFi), and the lending and borrowing of crypto-assets).
  • June 2025: the EC should present an interim report on crypto-asset market developments and trends (including an assessment of the requirements for DeFi), and provide an appropriate legislative proposal.
  • From December 2025: the European Securities Market Authority (ESMA) should present an annual report on developments in crypto-asset markets and the application of the MiCAR requirements.
  • June 2027: the EC should present a report on crypto-asset market developments and trends (including an assessment of requirements for DeFi), and provide an appropriate legislative proposal.

Key legal acts

EU Regulations

Level 2 and Level 3 Texts

National Lithuanian Laws

  • In order to implement MiCAR in Lithuania, certain national legal acts have to be amended so as to designate the Bank of Lithuania as a national competent authority and enable the supervision of crypto-asset service providers as well as issuers of EMTs and ARTs. These laws will be referenced here once they are approved.

Authorisation process

As noted above, the Bank of Lithuania is not currently granting authorisation to companies issuing crypto-assets or providing crypto-asset services in Lithuania. The upcoming responsibilities to licence and supervise certain crypto-asset market participants in accordance with MiCAR will be carried out in light of the risks associated with markets in crypto-assets. Only those companies that are transparent, honest, have a high level of integrity and pay due attention to compliance, AML/CFT requirements (among others) and quality of services will be eligible for a licence. The crypto-asset market participants will have to prove that:

  • the members of the management body (and shareholders) are of sufficiently good repute and collectively possess the appropriate knowledge, skills and experience to manage the business and can commit sufficient time to performing their duties;
  • the crypto-asset market participant understands and will comply with the principles of good governance (management of conflict of interests, separation of performance and control functions, honest and timely cooperation with the supervisory authority, etc.);
  • the members of the management body not only understand the legal requirements specified in MiCAR, but also have appropriate knowledge and understanding regarding the national legal regulation and legal environment in Lithuania;
  • the funds which are used to finance the business activities of a crypto-asset market participant or to acquire a qualifying holding in a crypto-asset market participant are of legitimate origin (supported with an unbroken chain of documents). The Bank of Lithuania will also investigate the shareholder’s business history and the proposed financing scheme;
  • the crypto-asset market participant will have an appropriate operation centre in Lithuania for its planned business model and will not be an ‘empty-shell’ type of company, with most of its activities outsourced to third parties.

Licensing under MiCAR will be carried out by the Bank of Lithuania following the same rules and principles as licensing any other current financial market participant. Thus, incomplete, poorly or incorrectly prepared, or factually inaccurate applications submitted to the Bank of Lithuania will not be accepted for evaluation. The Bank of Lithuania sets high standards of quality and appropriate preparation and will not tolerate the abuse of the licensing process.

Given that the Bank of Lithuania will be designated as the national competent authority for licensing and supervising entities subject to MiCAR, this Regulation will be implemented to its full extent as soon as the relevant requirements enter into application.

Further information regarding the upcoming authorisation process can be found here.

Certain questions frequently asked in connection to the upcoming authorisation process can be found here.


Related positions and warnings

Bank of Lithuania

European Supervisory Authorities (ESAs)


Contacts

In case of further questions, please reach out to tl.bl@remocwen.

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Last update: 05-04-2024