Lithuania ranks second in EU countries in offering a safe and reliable environment for companies involved in the Crypto business by providing a Crypto License. The Bank of Lithuania issues this license and, together with the Financial Crimes Investigation Service (FCIS), supervises the Crypto activities performed by the companies. Recently, it has been observed that these two bodies are quite concerned about the misuse of crypto services in the form of money laundering and terrorist financing.
So, considering this challenge, the Ministry of Finance will execute MiCA (Markets in Crypto Assets) on 30 Dec 2024, which will maintain the excellent reputation of this jurisdiction in the eyes of Fintech companies. However, last year, FCIS and the Bank of Lithuania imposed fines from € 2.7 grand to €220 grand against such companies that infringed the laws. These pictures are kept in front of you so that you can be aware of the current situation, which will help you get a crypto license in Lithuania effectively.
Types of Crypto Licenses In Lithuania
The finance regulatory body has divided the crypto license based on the activities that a company can perform, and they are of two types, i.e., Cryptocurrency Exchange License and Cryptocurrency Wallet License. Now, let’s see the prime difference between these two types of crypto licenses in Lithuania.
Cryptocurrency Exchange License
This type of license is applicable for those companies whose business nature is exchanging virtual currency against FIAT and also exchanging virtual currencies between them. So, if you want to establish a business in exchanging virtual currencies, then you need to go with this license.
Cryptocurrency Wallet License
If your business nature is to assist clients by storing their cryptocurrencies and taking service charges against them, then you will have to get this license from this reputable Baltic country to run your business.
Key Points To Consider Before Applying For A Crypto License In Lithuania
Getting a crypto license in Lithuania is not a complex process, but there are a few points that you should consider before applying for the license so that you can get the license easily.
• To get a license from Lithuania’s jurisdiction to offer crypto exchange service crypto wallet service, you need to establish a Limited Liability Company (UAB) in Lithuania.
• The minimum share capital required to operate this business is €125,000 as per the new amendment (November 2022) in crypto license. Before this amendment, the required share capital was only €2,500, as this step was taken to allow potential companies to establish their business in Lithuania.
• Another important point that you should consider when availing of a cryptocurrency license from Lithuania is the appointment of an AML officer who will ensure that the AML policies are properly executed, and the said person should be a Lithuanian resident.
• As per the laws, the company should have at least one person as a director, and he/she can be from any country, as the law does not force the director or a board member to be a citizen of Lithuania – at least for the moment.
• After obtaning the cryptocurrency license, you will have to ensure that the operations are conducted as per the AML policies. In addition, you need to compile the data and keep it up to date because the FCIS authority may seek the data anytime.
Documents Required For Getting A Crypto License In Lithuania
• A passport copy of the director or a shareholder.
• A copy of no criminal record.
• A detailed business plan, including the AML policies.
• A copy of business incorporation, including Article of Association.
• A domain ownership
• CV of director or shareholder
A Detailed Process For Availing A Crypto License In Lithuania
The crypto licensing process in Lithuania is very simple, and you need to follow the steps provided below. In addition, you should have the documents listed in the above stanza, as they play a crucial role in the licensing process.
• For obtaining crypto license in Lithuania, you need to set up a Limited Liability company in Lithuania, and that could be done remotely.
• Thereafter, submit the business incorporation documents to the governing body to get your business registered in the Lithuania Register of Legal Entities. Once they approve it, you can open a corporate bank account.
• Next, fill out the application form for a crypto license and submit it along with the documents to the office of the local regulator.
• If everything goes in your favour, then you will get the crypto license, and you can start your business.
Before starting a cryptocurrency exchange or crypto wallet service business, you need to understand the tax policy, as it will help you to carry your business forward smoothly. As per the law, corporate UAB companies will have to pay 15% of their profits.
However, if your company size is smaller, where the employee count is 10, and you have a gross income of only €300,000, then you will have to pay very little corporate tax, as the rate lies between 0-5%. Moreover, virtual currency exchange service is exempted from VAT, but if sales are generated from services provided in virtual currencies, then VAT is counted.
Wrap Up
The cryptocurrency market is rising exponentially, and that has brought many companies into the race to take advantage of this business model. However, operating a crypto business without a license is not possible, so most businesses look for a jurisdiction where the licensing process is smooth and it should be recognized globally, and Lithuania fulfils these conditions. Moreover, Lithuania is a growing hub for fintech companies, and getting a license from this country will help you expand your business smoothly throughout the entire European region.
