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Lithuania to Announce Tough New Crypto Laws

Lithuania To Announce Tough New Crypto Laws

Lithuania is reported to be working on cryptocurrency regulations which surpass Europe’s Anti-Money Laundering Directives for their prohibitive impact.

The new changes are likely to put pressure on the cryptocurrency space as the government in Vilnius attempts to tighten its control.

Lithuania’s central bank has also been canvassing commercial banks and exchanges to get a clear picture of cryptocurrency and the role it may have in the future of the country’s financial sector, which is seen as encouraging for entrepreneurship in the space. However, the Bank of Lithuania recently declared that financial market participants should not get involved in crypto-related activities and should refrain from providing any crypto related services.

The country has recently become a growing center for ICOs and crypto projects. Latest figures show that Lithuania is now attracting an impressive 10% of all global ICO investments, with cryptocurrency bringing in half a billion euros from such activities. This in part to the government’s liberal stance on regulation, which is clearly about to change.

The new rules will require a far more rigorous registration process requiring that companies applying to operate in Lithuania adheres to comprehensive know your customer (KYC) and anti-money laundering procedures. Also, large transfer will now need to be reported to the country’s Financial Crime Investigation Service (FCIS).

The rules will cover both crypto-to-crypto transactions as well as fiat-based business, and all companies acting as intermediaries in any such deals will need to check client identity under Lithuania’s laws on the Prevention of Money Laundering and Terrorist Financing. Sigitas Mitkus, Director of Lithuania’s Finance Ministry’s Financial Market Policy Department explained:

“We want to create a transparent legal environment for virtual currency exchanges, depository wallet operators and ICO initiators. We also want to contribute to ensuring better consumer protection.”

 

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Lithuania Probe: Some Euro Banks Cited for Trading Big in Crypto

A government probe in Lithuania into the activities of private individuals and cooperate bodies has revealed that major European banks have been facilitating large crypto-fiat deals.

The country’s Financial Crime Investigation Service (FCIS) has been investigating activities which are reported to have happened over a period of two years. This investigation mainly concerns large trading transactions, some running into the millions of euros traded for cryptocurrencies and through European banks.

The investigation was part of a national analysis of financial activity, in order to examine the direction of money-flow in Lithuania’s financial system. The information was gathered by the FCIS from sources such as the Central Bank of Lithuania and government departments responsible for electronic fund regulation.

The FCIS found that some major financial institutions such as Danske Bank and Swedbank conducted business for their clients running into millions of euros. The next step, according to the investigators, is to find where the money originated, with 7 banks trading cryptocurrency worth €661 million. The three largest transactions handled by the banks were valued at 27.2,16.6 and 14.1 million euros

FCIS director Mindaugas Petrauskas reported that one Lithuanian resident recorded a profit from cryptocurrency trading of EUR 60 million, commenting, “The question arises as to where does it come from, that’s a lot of money.”

There has been a significant increase in funds raised through ICOs since 2017 with funds raised rocketing from EUR 82 million in 2017 to EUR 500 million in 2018 so far. The FCIS is concerned principally with money laundering aided by the anonymity of the transactions with wallets often located overseas. Petrauskas indicated that the investigation is in line with the current recommendations proposed by the Finance Ministry at further ICO regulation.

The Lithuanian Minister of Finance recently suggested that the country was in the “middle of an explosion of ICOs and blockchain based projects”, as the ministry published a guideline document which covered information for investors regarding ICOs and taxation.

The country has recently become a growing center for ICOs and crypto projects. Latest figures show that Lithuania is now attracting an impressive 10% of all global ICO investments, with cryptocurrency bringing in half a billion euros from such activities.

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