Cryptocurrency Licence in Lithuania

Lithuania is one of the few member states of the European Union in which legal financial transactions with cryptocurrency are possible and there is an official permit for the conduct and regulation of cryptocurrency business by the state (FCIS). Widely recognized in the traditional financial sector (FIAT) and in e-money licensing, the Lithuanian government also offers transparent and cost-effective virtual currency authorization.

Lithuania offers a friendly and regulated legal environment for companies offering cryptocurrency exchange services and cryptocurrency wallet services, with clear and transparent regulations in force since 2020.

In Lithuania it is possible to obtain two types of licenses for working with virtual currency:

Cryptocurrency exchange license (Cryptocurrency exchange license). A company with such a license is able to exchange digital currency for FIAT or vice versa, or cryptocurrency for another cryptocurrency, receiving a commission for the services provided.

Crypto wallet and custodian services license (Crypto wallet and custodian services license). A company with such a license may operate customer wallet to store cryptocurrency including generating and storing encrypted client keys.

Both licenses granted are controlled by the Lithuanian Financial Crime Investigation Service (FCIS)

COST OF CRYPTOCURRENCY LICENSE

PACKAGE «COMPANY & CRYPTO LICENSE IN LITHUANIA»

 9,900 EUR
PACKAGE «COMPANY & CRYPTO-LICENSE IN LITHUANIA» INCLUDES:
  • Establishment or purchase of a ready-made company
  • Deposit of share capital (EUR 2,500)
  • Preparation of legal company documents
  • Assistance in director employment/KYC/AML officer and information State Social Insurance Fund
  • Lease of legal address at Vilnius Business Centre for 1 year
  • Review of the business model and the structure of the Cryptocurrency Company
  • Assistance in opening a bank account for cryptocurrency companies
  • Procedural Rules and KYC/AML Company Procedures
  • Preparation of notifications, forms and supporting documents for submission to FCIS and Business Regests of Lithuania
  • Paying company registration government fees
  • Paying government crypto license fees
  • General counselling (5 hours)

*establishment of the company and receipt of the cryptocurrency license is possible to implement completely remotely, without visiting Lithuania.

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Requirements for the applicant company

In order to prevent the legalization of the proceeds of crime, the activities of cryptocurrency companies are monitored by the relevant legal institutions. Board member as well as owners of the company must meet the requirements of impeccable reputation and have no criminal record.

Companies providing services in the cryptocurrency sector are subject to the following requirements:

  • At least one owner (natural or legal person)
  • One board member (may also be the owner)
  • AML Compliance Officer (may be the same as board member)
  • Company virtual address in Lithuania
  • All clients must undergo a background check and identification procedure
  • Customer data must be kept with the possibility of submitting them to the regulator
  • The company must have internal control and risk assessment procedures
  • Reporting to the regulator (Financial Crimes Investigation Service)

There is no need for owners or board member of a cryptocurrency company to be physically present in Lithuania so that foreigners/non-residents of Lithuania can legally engage in crypto related activities while in their country.

General provisions

During the licensing process, the regulator has the right to request additional information and a detailed/white paper description of the proposed activity of the crypto currency company. A licence may be issued only after all necessary information is considered sufficient and all licensing conditions are met.

Any change in the structure of the cryptocurrency company after the receipt of the license (address, owner, board member, beneficiary, AML officer) requires the registration of changes in the registry with the provision of a complete set of documents.

The application for a cryptocurrency licence is considered by the Bank of Lithuania, regulated by the FCIS and issued by the Business Register. FCIS is an independent structural unit of the Lithuanian Police and Border Police Department.

Cryptocurrency companies are regulated by the Law on the Prevention of Money Laundering and Financing of Terrorism, in particular Order No V-5 of January 2020.

The cryptocurrency company has no special reporting requirements to the tax authorities. Accounting must be provided in the same way as for any other Lithuanian company. FCIS can always make prescriptions and queries about the activities of a cryptocurrency company. The basic requirement of the FCIS is to comply with AML/KYC requirements, such as the collection of client data from a crypto related project and the possibility of making them available to the regulator on demand.

Licensing process

In order to apply for a cryptocurrency license, a limited liability company (UAB) must be established in Lithuania to provide cryptocurrency exchange or storage services. The minimum requirement for the company’s authorized capital is 2,500 EUR. The establishment of a cryptocurrency company can be carried out upon a visit to Vilnius or completely remotely by proxy without the need to visit Lithuania.

Today UAB is one of the most frequently used and popular forms of business activity in Lithuania.

Uždaroji akcinė bendrovė (UAB) in translation from the Lithuanian language means Closed Joint-Stock Company. The statutory capital of the UAB is divided into shares which can be sold in whole or in part, donated or hereditary. UAB must have at least one owner (natural or legal person) and one director (natural person) authorized to sign on behalf of the company.

Stages of obtaining a cryptocurrency licence in Lithuania:

  1. Signing of cooperation agreement with Company in Lithuania UAB
  2. Preparation of the necessary documents for the purchase/registration of the company
  3. Company purchase/registration (takes approximately 5 business day)
  4. Preparation of the company to a form suitable for the license application (up to 7 business days).
  5. Once the company has been registered and provided with all the necessary information and documents, it is possible to apply for a cryptocurrency license.
  6. The application for the issue of a license for activity is processed by the FCIS within 20 working days from the date of submission of the application.

PROCEDURE FOR OBTAINING A CRYPTOCURRENCY LICENCE

Documents required for the application

The following documentation will be required to review and prepare an application for a cryptocurrency licence:

  • Valid copy of passport from home country
  • Power of attorney (PoA) (if the procedure for opening a company and obtaining a license occurs remotely)
  • Company business model/detailed activity description
  • CV/Summary of experience and education of all participants in the crypto related project
  • Website address where cryptocurrency services will be offered
  • Certificate of criminal record (not more than 3 months) for owners, board members, final beneficiaries (UBO) and AML officers
  • Data of all beneficial owners (UBO) must be provided at the request of FCIS

The cryptocurrency company must also have an AML officer. AML officer for the prevention of money laundering and terrorist financing must have previous professional experience and an impeccable reputation (Lithuanian residence is not compulsory).

The licensed company must keep a detailed and up-to-date overview of all customers and transactions in accordance with AML/KYC rules. The FCIS Control Authority can make requests about the company’s activities, especially regarding compliance with the AML/KYC policy.

Risk Assessment, KYC/AML documents and procedural rules

Before applying for a cryptocurrency license in Lithuania it is necessary to prepare documentation on internal procedures of the company in order to meet the anti-money laundering criteria (AML) and «Know your client» (KYC) established by FCIS. Some parts of this include, for example:

Internal security measures and risk assessments

  • Assessment and risk management of money-laundering and terrorist financing:
  1. Determination of risk level
  2. Risk classification
  3. Nationality
  4. Transaction control procedures
  5. Origin of funds
  6. Compliance monitoring and internal audit
  7. Due diligence measures
  8. Notification obligations
  • Collection and storage of information on company transactions and clients
  • Fulfilling the obligation to notify the regulator
  • Internal control rules of the company

Procedural rules, AML/KYC procedures

  • Description of lower-risk transactions and establishment of appropriate requirements and procedures for such transactions
  • A description of transactions with a higher level of risk, including risks arising from means of communication, location of customers. Other parameters and establishment of appropriate requirements and procedures for conducting and monitoring operations
  • Rules of Due Diligence
  • Customer Identification – document requirements
  • Source of welfare, proof of address of residence
  • Requirements and procedures for storing data on transactions and clients of the company
  • Regulatory Notification Requirements

AML/KYC officer

The duties of an AML employee include:

  • Assistance in the development, implementation and maintenance of an institution’s anti-money-laundering programme.
  • Organization of the collection and analysis of information on suspicious transactions or transactions where there is a risk of money-laundering or the financing of terrorism.
  • Submission of written statements on compliance with the requirements of this Law to the management of the Virtual Currency Exchange Service Provider or Virtual Currency Wallet Service Provider registered in the Commercial Register of Lithuania.
  • High Risk Customer Accounting and Suspicious Activity Reporting.
  • Communication to FCIS in case of suspicion of money laundering or financing of terrorism.
  • Develop and maintain a system of risk assessment for products and services, clients and clients, as well as for other issues related to money-laundering.
  • Monitor and implement a permanent AML learning program for other employees.
  • Guidance and reporting to senior management on issues related to AML’s internal policies and procedures.
  • Organization and conduct of inspections and audits of external organizations and development of recommendations on compliance with regulatory requirements.

KYC/AML officer applies due diligence measures:

  • When establishing a business relationship with a new client
  • When a cash payment is made in excess of 15,000 EUR or equal to in other currencies
  • When verifying information in case of doubt as to the reliability of the documents or data provided
  • In the case of suspected money laundering or financing of terrorism

FCIS requirements for an AML compliance officer:

  • Only a person who has the education, professional aptitude, abilities, personal qualities, experience and impeccable reputation necessary for the performance of the duties of AML may be appointed as an employee of AML.
  • The company should provide specialized training on measures to prevent money-laundering and the financing of terrorism to its employees, especially those responsible for customer relations and transaction control.

The Compliance Specialist not only tracks and processes various confidential financial data, but also interacts regularly with the board of directors as well as financial authorities. In addition to KYC/AML, an officer of your company must have sufficient authority to ensure the effective performance of his duties. Ideally, an AML specialist should be a director-level employee with industry experience to deal with all aspects of their professional environment.

TAXATION OF CRYPTOCURRENCY COMPANIES IN LITHUANIA

  • Virtual currency exchange services are not subject to VAT.
  • Services provided and accounts paid in virtual currencies are subject to normal VAT rules.
  • The cryptocurrency company’s profits are taxed at a rate of 15%. A micro company with less than ten employees and less than 300,000 euros of gross annual income may be taxed at a reduced corporate tax rate of 0-5%.
  • Income tax (WHT) 15% is levied on distributed profits (dividends paid).

TAXATION OF CRYPTOCURRENCY TRANSACTIONS IN LITHUANIA

The taxation of transactions in virtual currency depends on the nature of the transactions. There is no direct tax if the token is sold or purchased similarly to a security, investment or other currency.

Sales are considered normal/regular even if payments for goods and services are received in virtual currencies. For accounting purposes, the transaction must have a value in euros and VAT rules are applied according to a normal transaction. Payment of goods or services in virtual currency does not exempt from VAT. If VAT is applied to payments in physical currency, it should also be applied to payments in virtual currency. VAT declarations must be submitted in euros and VAT will be paid / returned in euros.

FCIS

The mission of the Financial Crimes Investigation Service (FCIS) is to protect the public financial system by uncovering criminal acts and other violations of the law.

The purpose of the Financial Crimes Investigation Service is to develop methods of combating criminal activities against the public financial system. In pursuance of this objective, FCIS is actively involved in the implementation of the National Crime Prevention and Control Programme, the National Anti-Corruption Programme, and is preparing a public relations strategy, through which it seeks to involve society in preventive activities against financial crimes. The Service pursues its objective by taking operational measures, detecting and conducting pre-trial investigations and preventing criminal acts, implementing measures to combat money-laundering, as well as the means to guarantee the legality of the receipt and use of financial support from the European Union and other countries, by conducting an assessment of their commercial and financial activities and submitting an expert opinion thereon, as well as measures to ensure that hidden taxes can be reimbursed in order to maximize their impact on the actual revenues to be paid into the State budget.

At present, the Service gives priority to the detection, investigation and prevention of criminal acts related to money laundering, VAT embezzlement, illegal receipt and use of financial support of the European Union and foreign countries. These criminal acts are particularly damaging to the State budget and create a negative image of the State.

Company in Lithuania UAB cooperates with each of our clients individually and we will prepare the documents based on your information. Please contact our team and we will offer you the best possible solution for your needs.

Frequently asked questions

  • Does Lithuania grant a licence for crypto activities?
    Yes, a Lithuanian company may apply for a licence for cryptographic activities under the Order on instructions to deposit operators for virtual currency money monitors and operators for virtual currency exchanges for the prevention of money laundering and / or financing. The purpose of the Law is to prevent the use of Lithuania’s financial system and economic space for money laundering and terrorist financing by increasing the reliability and transparency of the business environment. This Law regulates the principles of assessment, management and hedging of risks related to money-laundering and the financing of terrorism, supervision of responsible persons, obligations arising from the collection and publication of data of beneficial owners, Obligations related to the collection and publication of data on the holders of payment accounts, liability of the persons liable in case of violation of the requirements arising from the legislation.
  • How do I get a crypto license in Lithuania?
    In order to get a crypto-license in Lithuania, it is first necessary to establish/ buy a ready-made company in Lithuania. Once the company has been re-registered in your name, you can apply for a cryptocurrency license (Cryptocurrency exchange license or Crypto wallet and custodian services license) by notifying Lithuanian Financial Crime Investigation Service about the crypto activity (FCIS). An electronic member of the board of a company may apply for a cryptocurrency licence in Lithuania. A crypto license in Lithuania is issued for an indefinite period.
  • Is it necessary to contact Lietuvos Bankas in cryptographic activities on behalf of a Lithuanian company?
    No, the Lithuanian Financial Crime Investigation Service (FCIS) regulates the activities of cryptocurrency companies in Lithuania
  • What are the activities of the crypto license in Lithuania?
    The crypto license in Lithuania is divided into two activities:
    Cryptocurrency exchange license (cryptocurrency exchange license). A company with such a license may exchange the digital currency for FIAT or vice versa, or a cryptocurrency for another cryptocurrency, receiving a commission for the services provided.
    Crypto wallet and custodian services license (cryptocurrency and customized services license). A company with such a license can use the client’s purse to store the cryptocurrency, including creating and storing encrypted client keys.
  • How long does it take to get a license?
    The first step for obtaining a crypto-license in Lithuania is the establishment/purchase of a company in Lithuania. It is important to remember that the company’s charter capital (at least 2,500 euros) must be paid. Once you have become the owner of the company, you must notify Registrų centras of the cryptographic activity of the company. Under article 25, paragraph 4 The Law on Prevention of Money Laundering and Financing of Terrorism, a legal person who has started the activities of a virtual currency exchange operator or a virtual currency purse holder within five working days at the latest, must inform Registrų centras about the activity of the service provider of the virtual currency exchange operator and the operator of the virtual currency-custodian purse.By providing this information, the virtual currency exchange operator and the virtual currency custodian’s wallet operator must confirm that he or members of his administration or supervision, and the beneficial owners are familiar with and comply with the requirements of legal acts to prevent money-laundering and the financing of terrorism. Only then can you contact Lithuanian Financial Crime Investigation Service (FCIS) and provide all necessary documents.
  • Can non-residents of Lithuania own a crypto company?
    Yes, non-residents of Lithuania may be rightful owners of a Lithuanian crypto company but it is worth bearing in mind that non-residents of Lithuania will have to provide an extended package of documents, including a certificate of no criminal record from the country of residence.
  • Can non-residents of Lithuania be part of the board of a Lithuanian crypto company?
    The board of the Lithuanian cryptocurrency company may include non-residents of the country. It should be borne in mind that the board of the virtual currency exchange operator and the operator of the virtual currency depository cannot include natural persons who have previously been convicted of a crime and have a valid criminal record that has not been annulled.
  • Is it necessary to have a banking account to obtain a licence?
    Yes, an account with a financial institution registered in Lithuania (one of the Lithuanian banks or the Electronic Money Institution registered in Lithuania) must be opened with a company applying for a crypto license. The company’s authorized capital must be deposited into this account.
  • What is the minimum authorized capital for a virtual currency service provider?
    The minimum authorized capital is 2500 EUR. The authorized capital must be paid in full before the application is submitted. It is only possible to deposit the authorized capital for a cryptocurrency company with a deposit from the owner/owners' personal account in the account of the company in one of the banks of Lithuania or Electronic Money Institution registered in Lithuania.
  • For how long is a crypto-license issued?
    A crypto license in Lithuania is issued for an indefinite period.
  • Is it possible to deposit authorized capital in cryptocurrency?
    No, it is only possible to deposit the charter capital for a cryptocurrency company by a money deposit from the owner/owners' personal account into the account of the company in one of the banks of Lithuania or the Electronic Money Institution registered in Lithuania.
  • How is the charter capital of a crypto company paid in?
    The authorized capital is paid by means of a monetary contribution (bank transfer). The owners of the company contribute capital at the nominal value of their share (i.e. corresponding to their share in the authorized capital). Payment is made from the bank account of the member of the board to the bank account of the company in one of the banks of Lithuania or Electronic Money Institution registered in Lithuania.
  • What happens next with the money investment in the corporate account of the Lithuanian crypto company?
    The amount contributed can be used for the commercial activity of your company crypto after the Registrų centras of Lithuania confirms the deposit of the charter capital of the company.
  • When do you need to deposit capital to open a company and obtain a crypto-license in Lithuania?
    The full payment of the charter capital of the crypto-company (2,500 EUR) is mandatory before applying for a crypto-license in Lithuania. The authorized capital must be paid at the time the company is established in Lithuania. The amount paid can be further used to finance the company’s crypto business in Lithuania.
  • What does a crypto company need to apply for a cryptographic license in Lithuania?
    The conditions for applying for a cryptocurrency licence are:
    • Procedural melting and risk assessment procedures
    • Capital paid (at least 2,500 EUR)
    • Availability of KYC/AML officer with impeccable reputation.
    • Certificate of absence of criminal records from all company members
    • CV all project participants with key positions in the company
  • Why you should get a crypto license in Lithuania?
    Nothing attracts entrepreneurs like the speed and cost of launching the project, and in Europe, Lithuania is now the most favorable jurisdiction for launching a cryptocurrency project. The legalization of crypto activities in Lithuania will require one or two cryptocurrency licences, which can be obtained within one month, which strengthens its position among the most convenient and preferred jurisdictions for the launch of the blockchain project. The financial costs of the legal part in Lithuania are also significantly lower than in other European countries. A comparison of the European jurisdictions in which cryptographic activity is legalized can be found here.
  • Are Lithuanian cryptocurrency companies audited?
    Yes. The physical office can be visited by the regulator at any time to check the documentation and confirm the company’s activities. The regulator can also request information on any client of the crypto project. All clients must have information is held for at least five years from the date of the last transaction and must be available for distribution to the regulator on request no later than two business days.
  • Can the director of a crypto company be a non-resident of Lithuania?
    Yes, a director of a company may not be a resident of Lithuania if he possesses the necessary skills and corresponds to the position and has an impeccable reputation.
  • What measures to prevent money-laundering and the financing of terrorism are in place in Lithuania?
    The Virtual Currency Deposit Service Provider and the Virtual Currency Exchange Company should take the following measures to prevent money laundering and / or the financing of terrorism: Identification of client/recipient of funds:
    • Determination of whether the client acts on his or her behalf or through a representative
    • If the client acts through a representative, identifying the client’s representative
    • Identification of the recipient - natural person
    • Identification of the client - legal person
    • Identification of the client, beneficiary of the legal entity
    • Collection of information about the client, member of the legal entity
    • Collection of information on the structure of the legal person and the nature of the activity; Collection of information on the purpose and intended nature of the client’s business relationship with the recipient of the funds, whether a natural or a legal person
    • Verification of the identity of the client and the recipient on the basis of documents, data or information obtained from a reliable and independent source
    • Continuous monitoring of the customer’s business relations
    • Regular review and updating of documents, data or information provided in the identification of the client and the recipient of funds
    • If it is impossible to fulfil the requirements for identification of the client and the recipient of funds - suspension of the transaction, and if it is impossible to establish a business relationship, termination of the cooperation
    • Application of customer and recipient identification measures not only to new but also to existing clients of the company (clients who became clients of the virtual currency operator and virtual currency exchange operator before )
    • Suspending suspicious money transactions or cryptocurrency transactions; ~- Notifying suspicious money transactions or FCIS transactions
    • Notice of virtual currency exchange transactions or transactions in virtual currency, if the amount of such monetary transaction or transaction is equal to or greater than EUR 15,000 or its equivalent in foreign or virtual currency, regardless of whether the transaction is in one or more related money transfers
    • A detailed examination of complex or unusually large transactions
    • Storage of information for a certain period of time
    • Appointing officials responsible for implementing measures to prevent money-laundering and / or the financing of terrorism
    • Training of staff
    • Introduction of internal systems to respond promptly to requests from the Financial Crimes Investigation Service through secure channels and to ensure full confidentiality of requests
    • Establish internal internal control policies and procedures
  • When are measures to prevent money-laundering and the financing of terrorism applied in Lithuania?
    The virtual currency depository wallet operator and the virtual currency exchange operator must take steps to identify and verify the identity of the client and the recipient: - Before starting a business relationship with the client; - Prior to a single exchange of virtual currency in an amount equal to or greater than EUR 1,000 or its foreign/virtual currency equivalent, whether the transaction is one or more related transactions (The value of the virtual currency is determined at the time of the money transaction Where there is doubt as to the accuracy or authenticity of the identification information previously received by the client and the recipient of the funds; - in any other case where there is a suspicion that there is a risk of money laundering and / or financing of terrorism. The Virtual Currency Depository Wallet Operator and the Virtual Currency Exchange Operator identify the client and the recipient of the funds in accordance with the provisions of Articles 9 to 15 of the Law, applying a risk-based approach, using: - The usual means and procedures for identifying the customer; Additional tools and procedures for customer identification to enhance customer identification; - Simplified means of customer identification and procedures for performing simplified customer identification. - in such cases where the virtual currency depository wallet operator and the virtual currency exchange operator are unable to meet the requirements, In sub-paragraphs 4.1.1-4.1.10 Order on instructions to deposit operators for virtual currency money monitors and operators for virtual currency exchanges for the prevention of money laundering and / or financing, shall refuse to cooperate. If a threat of money laundering and / or financing of terrorism is detected, the Virtual Currency Depository Wallet Operator and the Virtual Currency Exchange Point Operator must notify the Financial Crime Investigation Service of a suspicious money transaction.
  • How can Company in Lithuania UAB help in obtaining a crypto license?
    Our company has extensive experience in obtaining cryptocurrency licenses in Lithuania and is ready to accompany you throughout the licensing process. We will help in the establishment or purchase of a company in Lithuania that meets the requirements of the regulator, we will help with drawing up procedural rules and risk assessment, AML/KYC documents. Also Company in Lithuania UAB can help in finding and employing a Lithuanian KYC/AML officer for your company and train it in customer identification requirements under the Law on Prevention of Money Laundering and Financing of Terrorism.It should be noted that the selected employee will be a member of your company only, which is in accordance with the non-competitive clause and will represent it with the regulator. In addition, our employees can choose an office that fully complies with your company’s requirements and help with opening a bank account to deposit capital and open an account for working with crypto exchanges. Company in Lithuania UAB specialists will be glad to keep you up to date with all the latest changes in Lithuanian legislation and are always ready to answer all your questions.
  • What difficulties may arise in obtaining a crypto license in Lithuania?
    The most common problem today is the revocation of the licences of crypto companies that, in the process, have changed their owners and have not notified the regulator. Another common problem is the incompatibility of the KYC/AML officer with the position and his inability to properly perform his duties.
  • Where can I open a bank account for a Lithuanian crypto company?
    The opening of a bank account for a high-risk company, which is cryptocurrency, is a complex and sensitive issue. It is worth taking into account the fact that not every bank of Lithuania cooperates with companies of such activities, and buying a company with an open bank account is impossible. Our company has partner banks all over Europe that are ready to work with cryptocurrency, and we will be happy to accompany our clients in opening an account. Company in Lithuania UAB offers a wide range of additional services, such as accounting services for cryptocurrency companies, tax advice, financial licenses (EMI, Payment institution) and employment assistance (KYC/AML officer). For us the individual approach to each of our clients is important. We take care of the needs of your business, combining individual order processing as well as professional consultations, reasonable rates and company registration services in Lithuania for customers from all over the world. Besides, Company in Lithuania UAB provides support to entrepreneurs in accordance with the latest innovations of Lithuanian legislation throughout the life of their companies.
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