Cryptocurrency regulation in Lithuania
The crypto industry has made a real revolution in financial services, so today, more and more organizations are being created that provide services for servicing such assets. Crypto regulations in Lithuania set straightforward rules for the functioning of this industry. Here you can work entirely legally and thrive.
What requirements must your company meet?
Among all EU countries, Lithuania’s cryptocurrency regulation sets the most straightforward rules for getting a work permit.
Your company must employ at least 2 people – the owner and the shareholder. Also, a security specialist should work in the state who can combine the position of a shareholder. All company members must have an impeccable reputation, experience in similar situations, and specialized education.
Your organization must be incorporated in that jurisdiction and have a physical office in that country. The company’s owner may not have citizenship in this country, but it would be good if the director and security specialist were residents. As you can see, the choice of specialists is essential, so this issue must be treated carefully.
This jurisdiction is suitable for both large corporations and small start-ups with less than 10 employees. Previously, the minimum authorized capital was only 2,500 euros, but now this has increased to 125,000 euros.
You must comply with the KYC/AML policy to obtain a cryptocurrency license in Lithuania. You need to verify each user and store information about transactions. A security specialist should monitor your employees and clients’ work to ensure they are not fraudsters or money launderers.
If you want to ensure that your organization meets all the requirements, we advise you to contact our specialists. They will analyze your company’s performance and tell you what needs improvement.
Controlling the activities of a crypto organization
Crypto regulations require every organization to obtain a work permit. If you don’t, you could get in trouble with the law, pay a hefty fine, and have your platform banned.
After you receive a license, you must regularly submit a report on your activities. If regulators notice errors or suspect you of fraud or money laundering, you may lose your work permit. It’s worth saying that the license here is perpetual, but you can lose that if you get a lot of complaints from customers or if you don’t stop complying with government requirements.
Types of licenses for working with crypto assets
To earn money from cryptocurrency in Lithuania, you must get one of the crypto licenses.
In this jurisdiction, you are offered to obtain 2 types of licenses – for an exchange or wallets. The choice depends on what activity you are profiting from. So, if you make money from currency exchange, you need to get permission for exchanges. It will allow you to exchange fiat for crypto, crypto for crypto, and virtual currencies for another.
To profit from holding currencies, you need to get a license for wallets.
You must obtain both license types if you provide both services at once. Our experts will tell you what kind of work permit you need to get and how best to do it.
Cryptocurrency activity tax
In Lithuania, crypto organizations are required to pay taxes regularly. It is worth saying that users of small organizations employing less than 10 people receive tax benefits.
Income tax for large organizations in this jurisdiction is only 15%, which is 5% less than in Estonia. For small companies, this number ranges from 0 to 5%, which allows small businesses to develop more successfully.
However, unlike Estonia, there is a dividend tax of 15%. At the same time, exchange services are not subject to VAT.
If you need help understanding the terms of taxation, you should contact our specialists. They will tell you how much you have to pay in taxes.
The procedure for registering cryptocurrency activities in Lithuania
This jurisdiction has established the most simple rules for writing a crypto organization. You have to complete several necessary steps.
Business model development
To begin with, you need to think carefully about how your organization will function and what services you want to provide to your customers. You also need to think about the architecture of your company, what kind of employees you need and what tasks they will solve.
It would be best if you also thought about all the risks and how you will be able to comply with the KYC / AML policy.
Choosing a Unique Name
Your organization name must be unique. You should think of a few words and check them out. Also, you can think over the logo and slogan at this stage.
Collection of documents for registration of an organization
As already mentioned, your organization must be registered in this jurisdiction. To do this, you need to collect the necessary package of documents. All paperwork can be filed remotely, so there is no need to come to this country if you are not a resident.
Account opening
Your organization must have a bank account to store the entire authorized capital. You can choose the bank that will offer you the most favorable terms. It is worth saying that you can get a few rejections, as the crypto business is associated with many risks.
Obtaining a license
After all the preparatory stages are left behind, you must write an application and send it to the relevant government agencies. They have 2 weeks to review your application.
If you think through all aspects of your organization’s activities in advance, you can get a work permit within a month. This jurisdiction allows you to obtain permission in the shortest possible time among all EU countries.
Changes in VASP regulation for 2022-2023
Initially, this jurisdiction had very loyal requirements. Still, gradually it became clear that the rules needed to be tightened to better protect users from money laundering, fraud, and financial terrorism. It has resulted in government agencies needing stricter regulations.
Authorized capital
Previously, state bodies needed to establish strict rules for the authorized capital. Once, it was only 2,500 euros, but now this amount is increasing to 125,000 euros. The more money you have, the easier it will be for you to run a business and make it successful.
Local staff
Previously, the only requirement for employees was a good education and reputation. However, government agencies now require you to have local employees. You need to select your employees very carefully.Provision of services in the local market
Now you cannot provide services exclusively to citizens of other countries. A license in this jurisdiction allows you to work on the territory of all EU countries legally; however, you need to serve users from Lithuania.Our services
It is sometimes extremely difficult for a person without a legal education to understand the rules of regulation of the crypto industry. We advise contacting our specialists if you want to open your organization and need help choosing a licensing jurisdiction. They will conduct a full consultation, answer all questions and help you choose the jurisdiction that is best suited for your project. In addition, they can take care of many issues related to licensing, for example, collect the necessary documents for you, find office space and select the most suitable personnel for key positions.Conclusion
This country is gradually establishing stricter rules for regulating the crypto industry. However, they remain more loyal than in other countries. If you want to get a work permit as quickly and efficiently as possible, you can contact our specialists for help. They will analyze your company’s performance, tell you how it can be improved, help you assess the risks, and collect the necessary documents. It would help if you drew up a power of attorney for our specialists, and then they would be able to represent your interests in state bodies.FAQ
Yes, you can use crypto assets to pay for goods and services and mining or trading.
Yes, crypto organizations must pay taxes regularly. It is worth saying that the taxation system here is as simple as possible. Large corporations pay more, while small corporations have benefits.
If you have a good idea to create a new organization that will bring you constant profit, you can open it. It doesn’t matter if you have citizenship in that country.
To apply for a work permit, you need to apply to FCIS. This organization controls this industry.