Although European jurisdictions are one after another imposing restrictions on cryptocurrency activities, cryptocurrency is attracting more and more attention and the number of enthusiasts is growing. This necessitates the search for countries with a favorable legal environment for doing business related to virtual currencies.
From 2020, Lithuania became one of the TOP countries most friendly to cryptocurrency companies. The country has created the necessary legal environment for crypto-business. Such activities are clearly regulated and controlled to avoid the slightest sign of money laundering and terrorist financing. But a crypto license in Lithuania for cryptocurrency exchange or cryptocurrency wallet services is quite affordable. If you are ready to do business transparently, but without losing profits, this information is for you!
Lawrange Law Firm offers the service “obtaining a crypto license in Lithuania”. The proposal covers all the necessary steps to fully launch and further support the crypto business, from registering a company, obtaining appropriate permits and opening a current account to preparing AML / KYC policies in accordance with the requirements of the regulator and the organization of accounting.
Regulation of cryptocurrency activities in Lithuania
Thanks to a number of steps taken by the government, Lithuania has acquired the status of a European center of FinTech business. In particular, the capital of this country, the city of Vilnius, hospitably welcomes both fintech startups and large international financial companies. Among the reasons for the attractiveness of the jurisdiction for such activities is business-oriented legislation on low costs for registration, licensing and maintenance of companies.
To these advantages from 2020 added another – the introduction of clear and transparent rules for obtaining crypto-licences without the burden of bureaucratic procedures and financial requirements.
Notice! Lithuania’s attractiveness is growing against the background of unpleasant changes in the Estonian legislation on licensing of crypto-exchange activities, which were introduced in 2020-2021. Such changes include an increase in the minimum share capital for crypto companies and the mandatory relocation of the control center to Estonia. Moreover, the head of the Money Laundering Data Bureau (RAB) announced the possible revocation of previously issued crypto licenses. Similarly, Estonia is rapidly losing its status as a virtual currency-friendly country.
Important! In such circumstances, Lithuania becomes one of the few jurisdictions in the EU where it is possible not only to legally conduct cryptocurrency transactions, but also to conduct full-fledged business crypto.
It will be recalled that Binance, the world’s largest cryptocurrency exchange, is authorized and provides services to European clients in Lithuania.
How is cryptocurrency regulated in Lithuania?
- The Financial Crime Investigation Service (FCIS) has the authority to regulate this area.
- The term “crypto-license in Lithuania” is used conditionally, because in fact the provision of services in the field of virtual currencies is issued as a special permit, not a license.
- Obtaining such permits is in the so-called notification procedure – the crypto firm submits a notification in the form of a statement that it intends to carry out relevant activities. A package of necessary documentation is attached to the application.
- FCIS checks the company’s compliance with the requirements established by law and issues permits.
*** Note: The Central Bank of Lithuania insists on the division of traditional financial and cryptocurrency activities. In this case, virtual currency is allowed in the turnover of traditional market players.
Types of licenses for working with cryptocurrencies in Lithuania
Companies are given a choice of two types of authorization of cryptocurrency activities (licenses, permits). It is also possible to obtain both licenses at once.
1. Virtual currency exchange service provider.
The “virtual currency exchange operator” permit provides the legal basis for the operation of the exchanger, ie the provision of such exchange services with a commission:
- one virtual currency to another;
- fiat money for cryptocurrency;
- cryptocurrencies for fiat money.
2. Provider of cryptocurrency storage services in custodial wallets.
The “operator of deposit virtual currency” license provides services for creating encrypted keys for customers to ensure security, as well as the transfer of cryptocurrency to others.
Taxation of cryptocurrency activities
- Income tax (WHT, corporate tax) is 15% of Lithuania.
- Small firms with up to 10 employees and a gross annual income of up to € 300,000 can be taxed at a reduced rate of 0-5%.
- A cryptocurrency transaction is taxed depending on the nature. There is no direct tax if the token is sold or bought by analogy with another currency, securities or investment.
- Dividend tax is levied on distributed income and is 15%.
- The provision of cryptocurrency exchange services is not subject to VAT.
Requirements for the company to obtain a crypto license
To apply to FCIS and obtain a cryptocurrency license, you must meet the following conditions:
- to register a legal entity in Lithuania in the organizational and legal form of UAB (limited liability company)
- at least 1 shareholder and at least 1 director (may be a shareholder);
- have an office in the country (virtual office allowed);
- the minimum authorized capital for such a firm must be at least 2,500 euros;
- members of the board and final beneficiaries must meet the requirements of impeccable business reputation, as well as confirm the absence of a criminal record;
- AML / KYC compliance policies and regulations must be prepared in advance, and the company must have an AML control officer on staff.
List of required documents
Equal attention should be paid to the preparation of documentation for the company and the collection of documents for individuals involved in this business – the final beneficiaries (UBO), directors, shareholders, board members. In order to reduce the risk of errors, it is better to entrust the process of preparation of documentation to the experts of JSC Lawrange.
In the list of documents for individuals:
- notarized copies of passports from the countries of residence;
- a document confirming the current address of residence – utility bill (utility bills) not older than three months or a bank statement not older than three months;
- power of attorney (PoA), when business registration and licensing is carried out remotely;
- CV or link to a public business profile on social networks (for example, in Linkedin) – confirmation of education and professional experience of all project participants;
- apostille certificate of no criminal record not older than three months.
In the list of documents for a legal entity:
- charter and other corporate documents;
- consent from all directors;
- confirmation of opening a bank account in Lithuania;
- detailed description of the company’s activities (business model and business plan), link to the website.
Procedure for registration of cryptocurrency activities in Lithuania
You can register a company and obtain a crypto license in Lithuania from FCIS both by visiting Vilnius and being accompanied by our representative, and in a completely remote mode with a power of attorney from our specialist.
The process of registration of crypto-activity involves the following steps:
- Development of the company’s business model with an indication of the list of operations to be carried out.
- Selection and verification of the unique name of the crypto company, selection of the legal address
- Preparation of a power of attorney for a representative of JSC Lawrange, if you plan to draw up documents remotely.
- Execution of constituent documentation and filling in registration forms.
- Collection of documentation for individuals involved in the activities of the enterprise, in accordance with the requirements of the state. regulator.
- Registration of the company and opening a bank account for it.
- Composing and sending a message (application) to FCIS for a special crypto business permit. The term for consideration of such an application is on average one month.
*** Note: The regulator has the right to request additional information during licensing. In particular, it is a question of detailing the description of crypto-firm activity. The decision to grant the appropriate permission to the applicant is made only if it meets all the conditions and after consideration of all the requested information.
Regulation of cryptocurrency company activity in Lithuania
To prevent money laundering and criminal financing, cryptocurrencies must comply with strict regulations. First of all, it is a question of introduction of policies and procedures of internal control, an assessment of risks of activity of the company on the basis of requirements of the regulator. External control by authorized bodies is also envisaged.
Important! Among the main areas of internal and external control:
- Mandatory precautionary measures – identification and verification of all potential customers in accordance with AML / KYC rules, as well as verification of individual transactions of current customers in case of exceeding the set limit of 15,000 euros or the equivalent in another currency, or if other signaling criteria.
- Storage of customer information with the possibility of transfer to the supervisory authority upon request.
- Regular reporting to FCIS, as well as prompt response to current inquiries about the company’s activities.
- Financial monitoring and suspension of suspicious transactions.
- Introduction of the position of AML specialist (Compliance Officer), who should be responsible for the implementation of anti-money laundering policy. The appointment of this position to a specific person should be agreed with the FCIS.
- Regular conduct of a comprehensive audit of financial activities with timely identification of threats, risks and vulnerabilities.
- Submitting reports to the regulator and providing information on individual requests.
Attention! Any change in the structure of the crypto company after obtaining permission from FCIS (including change of address, owner, board member, beneficiary, AML specialist) requires registration with a complete package of documents.
Notice! There are no special requirements for accounting and tax reporting in a cryptocurrency firm. Accounting should be conducted according to the standards adopted for other companies in Lithuania.
Responsibilities of the AML specialist:
- participation in the preparation, implementation and support of AML policies in the company;
- participation in the development of a risk assessment system for goods and services, as well as customers;
- collection and evaluation of information on suspicious transactions, both with signs of money laundering and possible components of other fraud;
- accounting for high-risk clients;
- regular interaction with the board of directors, financial bodies;
- communication with FCIS representatives, and submission of reports (reporting) to this regulator;
- submission of reports of suspicious activity to the controlling bodies, in particular – in case of suspicion of money laundering;
- organization of training of the company’s personnel on measures to prevent money laundering, first of all – those who work with clients.
Requirements for AML specialist:
- residence in Lithuania;
- profile education;
- presence of professional experience and impeccable business reputation.
How should the client (individual or legal entity) be identified and verified?
- clearly define: the client acts on his own behalf or represents the interests of another person (in the latter case, this person should be identified);
- collect information about the ownership structure that manages the business, the client’s goals;
- double-check the personal data of final beneficiaries (UBOs), directors, shareholders, board members from independent sources;
- explore the client’s business relationships;
- constantly review and update information and documents about clients with whom we have already established cooperation;
- do not cooperate or immediately terminate cooperation upon receipt of relevant information from entities:
– to which international sanctions are applied;
– who have previously been suspected of money laundering and terrorist financing;
– who are politically significant persons;
– who are residents of jurisdictions where the appropriate AML measures do not apply.
When should a customer be identified?
- before establishing business relationships;
- before making random exchanges or transactions with cryptocurrency, if the amount is equivalent to or exceeds 1000 euros;
- when there are doubts about the accuracy or completeness of information previously received about the client or the recipient of funds;
- when there are any suspicions in connection with a transaction or transaction involving money laundering and terrorist financing.
Advantages of obtaining a crypto license in Lithuania with Lawrange
Thanks to ten years of experience in supporting international business projects and carefully monitoring legislative changes in the field of cryptocurrency regulation, the Lawrange team is able to become a highly effective assistant for those who want to obtain a crypto license in Lithuania. We perform a full set of necessary actions to authorize the crypto-service provider – the exchange or storage of virtual currencies.
Our support includes resolving the issue of registration of a company in Lithuania and affiliates of this business entity. We undertake to prepare and further launch the implementation of AML and KYC policies and regulations. At the client’s request, accounting support is provided, as well as other necessary services for the crypto firm. All steps to get the result are done remotely.
Cost and term of obtaining a crypto license in Lithuania
Important! Cooperation with the law firm “Lawrange” provides optimization of the time for obtaining a crypto license in Lithuania. Self-processing of documents with a high probability can lead to: at best – delaying the start of the crypto project, at worst – refusing to issue a permit due to errors made by the applicant.
At the same time, the average turnkey registration of crypto-business in Lithuania is from 1 to 2 months (it is about passing all stages from company registration and opening an account to obtaining a license).
Cost of Lawrange Law Firm services:
- obtaining one crypto-license – from 9999 EUR;
- obtaining two crypto-licenses – from 14,999 EUR.
The price includes:
- preparation of documents and company registration;
- assistance in developing a business plan and business model for obtaining a license;
- preparation of all documents, forms and applications for a license;
- development of a common AML / KYC policy that meets the requirements of the regulator.
The price does not include (paid separately):
- search for a local resident for the position of AML specialist (Compliance Officer) – from 1500 EUR / month;
- accounting services;
- assistance in opening a current account for the company – in the payment system (EMI) or in the bank – from 1000 EUR.
General AML / KYC policy for crypto companies
In order to obtain a special authorization from the Financial Crimes Investigation Service (FCIS) to provide services related to the exchange and storage of cryptocurrency, the applicant company must prepare: a) criteria for assessing the risk of customers and individual transactions; b) documentation with KYC (“Know your customer”) / AML (anti-money laundering criteria); c) procedural rules.
Procedural rules on security measures include:
- risk classification;
- risk assessment;
- application of due diligence measures;
- control over the origin of funds and transactions;
- internal audit and fulfillment of obligations to notify the regulator of suspicious transactions.
AML / KYC documentation includes:
- description of high-risk transactions, including those related to communications and customer locations – establishing requirements and procedures for conducting and monitoring such transactions;
- description of lower risk operations – establishing requirements and procedures for them;
- procedure for storing data on transactions and customers;
- regulatory requirements for notifying the regulator of suspicious transactions or transactions.
Registration of a crypto company in Lithuania
Due to the latest legislative changes, Lithuania can be considered the most affordable option for registering a crypto company among the countries of the European Union. If earlier such options could be attributed to Estonia, now it is no longer true. First, to register a cryptocurrency business in Estonia, you will have to invest more money (increased requirements for minimum share capital). Secondly, the organization of activities for such companies has become more complicated – there is a requirement for the mandatory transfer of the business management center to Estonia.
Important! Considering the prospects of crypto-business in Europe, Lithuania can reasonably be considered an excellent option among jurisdictions for company registration.
Advantages of Lithuania for conducting cryptocurrency:
- friendly attitude to crypto assets and activities related to them;
- clear and clear conditions for obtaining special permits (crypto licenses) for the provision of services related to the exchange and storage of cryptocurrencies (the so-called “cryptocurrency wallet” service);
- more flexible legal regulation of cryptocurrencies compared to neighboring Estonia;
- possibility of company registration, corporate account registration and remote licensing;
- acceptable corporate tax rate (15%) compared to other EU jurisdictions;
- the country has the status of a fintech business center for the last few years;
- no requirements for the residence of directors and shareholders of the company;
- almost complete absence of bureaucratic costs when registering a business with a non-resident;
- relatively low costs for both the registration of the enterprise and its maintenance in the future;
- creating the preconditions for entrepreneurs to be able to start crypto projects as quickly as possible, taking advantage of favorable market conditions.
What types of crypto licenses are available in Lithuania?
There are two types of licenses (permits) to provide services: 1) virtual currency exchange; 2) storage of cryptocurrencies in custodial wallets. You can get two licenses at once.
What is the AML / KYC policy?
AML is a regulation to combat money laundering, which is used worldwide. KYC (know your customer) – proper identification of the client with whom you plan to conduct financial transactions.
What is the cost of obtaining cryptocurrency in Lithuania?
With the support of JSC Lawrange, the cost of obtaining one license is from 9999 EUR, obtaining two crypto licenses – from 14 999 EUR.