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Lithuania’s Financial Technology Hub to Reduce Number of Cryptocurrency Companies Following New Licensing Regulations
Lithuania plans to establish a stringent licensing procedure for cryptocurrency firms currently functioning within its borders. This initiative, set to begin next year, is anticipated to lead to the elimination of numerous digital asset companies.
Bloomberg reported on Wednesday that approximately 580 cryptoasset businesses are presently registered in Lithuania. However, Simonas Krepsta, a member of the central bank’s board, expects that a reduced number will ultimately succeed in obtaining full operating licenses.
Krepsta indicated that the licensing process is expected to conclude by June 2025. Applications that fail to meet the specified criteria will be barred from Lithuania’s crypto ecosystem.
Central Bank Board Member Recognizes Insufficient Oversight Resulted in Crypto Industry Issues
Lithuania’s ability to attract innovative financial institutions also led to an influx of unregulated cryptocurrency companies. This surge of crypto enterprises positions Lithuania as a potential center for new regulations from both the nation and Europe.
Krepsta remarked that the crypto sector has demonstrated deficiencies under regulatory frameworks marked by limited oversight. “We have quite a lot of evidence of that in the US, other European countries but also Lithuania,” he stated to Bloomberg.
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“We observed a considerable number of failures, embezzlement incidents, and similar issues which were quite detrimental to the industry.”
Lithuania Gears Up for Its Own Crypto Regulatory Framework
Lithuania has developed a reputation as a sanctuary for crypto entrepreneurs. This is partly due to the country’s legal structure, which allows crypto transactions without restrictions. Additionally, the process of establishing a business in Lithuania has historically been relatively uncomplicated, further increasing its appeal to those in the crypto sector.
The nation tightened its anti-money laundering (AML) regulations on Nov. 29, 2023. The government approved a draft AML law, along with eight others, aimed at enhancing oversight and tightening measures against money laundering and terrorist financing.
With a focus on staying ahead of the curve, Lithuania aims to strengthen its own crypto regulations before the European Markets in Crypto Assets Regulation (MiCA) is implemented. This proactive strategy seeks to mitigate potential risks emerging in the crypto sector prior to MiCA taking effect.
The highly anticipated MiCA is expected to be enforced by early 2025.
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