The Position of the Bank of Lithuania on Virtual Assets and Initial Coin Offering Represents Changes in the Market
Taking into account the current market developments and the evolution of regulatory regimes and aiming to ensure a level playing field for all participants in the financial market, the Board of Governors of the Bank of Lithuania has updated its position on virtual assets and the initial offer of coins. This position is intended for existing and potential financial market participants and entities planning to organize the initial submission of coins or allow Lithuanian investors to invest in this type of product.
The term virtual currency, used in the previous version of the position, has been replaced by virtual assets. The position determines how and when virtual assets can be used for payment, indicates when and how financial market participants can set up investment funds to invest in virtual assets and other relevant issues.
However, the fundamental principles of this position remain unchanged: financial market participants should not participate in activities or provide services related to virtual assets; they should also ensure their separation from activities related to virtual assets. Although financial market participants are still prohibited from receiving payments in virtual assets, the regulation provides for the use of third-party services. Payments to a financial market participant can only be made in traditional currencies, so there are no additional risks.
In order to ensure a level playing field for all participants in the financial market, the updated position allows the creation of investment funds for professional investors who will invest in virtual assets. Such funds predominate in other countries; once the notification process has been completed, their investment units can be sold in Lithuania.
This position states that financial market participants cannot accept virtual assets with or without an obligation to repay them with or without interest. With the advent of new market models, financial market participants are also prohibited from making virtual loans for assets or accepting virtual assets as collateral (except where virtual asset tokens are considered securities).
The position will be reviewed regularly upon assessment of financial market developments. The first version of the position was published on 31 January 2014, warning consumers about the potential risks that virtual currencies entail.
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