MiCA and the Future of Crypto Regulation in Lithuania

Lithuania aims to effectively handle potential risks prior to the implementation of the European Markets in Crypto Assets Regulation (MiCA).

Lithuania Plans to Improve Crypto Environment Before MiCA Launch

Updated on January 10, 2024 at 20:03 EST

cryptocurrency

As the European Markets in Crypto Assets Regulation (MiCA) looms on the horizon, Lithuania is taking proactive measures to reinforce its national cryptocurrency regulation. We sat down with legal experts from Gofaizen & Sherle, who specialize in fintech law and crypto licenses in Lithuania and the EU, to discuss the implications of these changes. Let’s dive in and explore how these adjustments will impact crypto businesses within the country while offering valuable insights and strategies to navigate this evolving landscape.

The Proposed Changes in 2024

The Ministry of Finance in Lithuania proposed draft legislative acts that aim to manage the emerging risks before the application of MiCA. These interim measures would require crypto-asset service providers to adapt to new regulations. Here are the key proposed amendments:

Depositing Authorized Capital

From May 1, 2024, companies would be required to deposit the funds forming their authorized capital (minimum EUR 125,000) into an account with a Lithuanian or EU credit institution with a branch in Lithuania. This ensures greater transparency and accountability in the crypto sector.

Equity Capital Obligation

Starting from May 1, 2024, crypto businesses would need to maintain a minimum equity capital of EUR 125,000. Existing companies would be required to report compliance with this requirement to the Financial Crimes Investigation Service by May 31, 2024, to avoid losing their right to operate in Lithuania.

Sanctions and Prohibitions

From January 1, 2024, the Financial Crimes Investigation Service would gain the authority to impose new sanctions on crypto entities for certain infringements. This further strengthens supervision and regulation within the crypto sector.

Delegation of Functions

New requirements for delegating identification activities to other entities would come into effect from May 1, 2024. These measures ensure that proper due diligence is conducted when onboarding customers and reduce the risk of money laundering and other illicit activities.

While these proposed changes are still under discussion with various institutions and stakeholders, it’s crucial for crypto asset providers in Lithuania to stay informed and prepare for the potential adoption of these amendments. Here are some strategies to consider:

Establish an AML Department

As regulatory requirements become more stringent, having a dedicated department to handle compliance matters is essential. Implementing robust operating procedures and ensuring your staff have the necessary expertise and knowledge will be key to success in the crypto industry in 2024.

Focus on Employee Adaptation

With the introduction of new regulations, it’s vital to invest in employee training and education to meet the evolving compliance standards. By cultivating a community of highly qualified professionals in the crypto industry, Lithuania can position itself as a hub for innovation and expertise.

Implement Sanctions Prevention and Personal Data Policies

To navigate the changing landscape, crypto businesses must prioritize the development of sanctions prevention and personal data policies. These policies ensure that operations align with regulatory requirements and protect customer data.

Q&A

Q: How will the proposed changes affect the crypto sector in Lithuania?

The proposed changes aim to strengthen the regulation and supervision of the crypto sector in Lithuania. While they may introduce additional compliance requirements and operational costs, they also lay the foundation for a more transparent and secure industry.

Q: How can crypto businesses prepare for the potential adoption of these amendments?

Crypto businesses should closely monitor the legislative process and outcomes. Having a proactive approach to compliance, investing in employee adaptation, and establishing strong operating procedures will be crucial to navigate the changes successfully.

Q: Are these changes unique to Lithuania, or will other EU countries adopt similar regulations?

While each EU member state has the flexibility to decide on the application of transitional periods under MiCA, it is likely that other countries will also introduce similar regulatory measures to enhance the supervision and regulation of the crypto sector.

Future Outlook and Investment Recommendations

As Lithuania continues to strengthen its crypto regulation, it is expected to attract more investors and businesses to its thriving fintech ecosystem. With a proactive stance on compliance and an educated workforce, Lithuania is well-positioned to become a leading hub for cryptocurrency innovation and investment opportunities in the years to come.

References:

  1. Gofaizen & Sherle
  2. Crypto License in Lithuania and the EU
  3. MiCA

Disclaimer: The above article is an advertorial and not part of Blocking.net.com’s editorial content.


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