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Obtaining a crypto exchange license has become crucial for businesses and individuals looking to enter Lithuania’s growing cryptocurrency market due to increasing regulations. Lithuania has emerged as one of the most attractive destinations for crypto businesses due to its favorable regulatory environment.
In this article, we will take a closer look at the steps involved in obtaining a crypto exchange license in Lithuania in 2023, from the application phase to approval.
Whether you’re a seasoned crypto entrepreneur or a newcomer to the industry, this post will be your ultimate guide to obtaining a crypto exchange license in Lithuania.
In order to apply for a crypto license in Lithuania, you must have a limited liability company (UAB) to provide cryptocurrency exchange or storage services. From 1st of November 2022, according to the new legislation, the required share capital requirement of such a company is 125,000 EUR (capital is not locked).
The main steps involved in the process are:
Applying for a crypto exchange license in Lithuania can be a complex process, and mistakes can cause significant delays or even result in rejection of the application. Therefore, it’s crucial to have a clear understanding of the requirements and regulations involved in the application process before proceeding.
Here is a list of the most frequent mistakes that applicants make, and the solutions to increase your chances of obtaining a license.
Make sure you have all the necessary documentation ready and available before submitting your application. This includes all legal documents, policies, and reports that the regulatory bodies require. Having all the documentation prepared in advance will help prevent delays and ensure a smooth application process.
Ensure you are financially prepared to cover all the necessary expenses related to obtaining a crypto exchange license in Lithuania. This includes the salary for the AML officer and increasing the share capital to meet the minimum requirements. Plan your finances ahead of time to avoid any unexpected financial challenges.
This often makes it difficult to increase share capital as this can only be done in FIAT contributions or other available instruments. Consider having sufficient FIAT funds available to increase your share capital to comply with the minimum requirement as this is the easiest option. If you hold a large amount of cryptocurrencies, make sure to convert them into FIAT before applying for a license. You can also consider partnering with a bank or financial institution that accepts cryptocurrencies to help you increase your share capital.
The regulatory landscape for crypto exchanges in Lithuania is becoming more strict as the country prepares to implement the Markets in Crypto-Assets (MiCA) regulation. The MiCA regulation is a proposed EU-wide framework for regulating crypto assets, which is expected to introduce more comprehensive rules and regulations for the crypto industry.
Lithuania aligns the regulatory framework with MiCA. As part of this effort, Lithuania has introduced increased requirements for crypto exchanges, such as higher initial capital requirements, mandatory positions for local AML officers, and lower KYC thresholds, to increase consumer protection and enhance the credibility of the crypto industry.
By implementing these measures, Lithuania aims to introduce more regulatory clarity in the Web3 space that would attract more crypto businesses to the country and establish itself as a leading hub for the crypto industry in Europe.
Licensing for crypto exchanges is quick in Lithuania. Application can be processed within a period of one week. The whole process usually takes from 1 month to 1,5 months. Factors like incorporation of the legal entity and sourcing of AML officers are the most common factors prolonging the process.
Despite the quick licensing process in Lithuania, there are still several factors that can prolong the application process. For instance, the incorporation of a legal entity can be a time-consuming process, as it involves choosing the right legal form for your business and obtaining all necessary documentation. Sourcing qualified AML officers can also be a challenge, as the demand for these professionals is increasing in the crypto industry.
Moreover, delays can occur if there are issues with the application or if additional information is required from the applicant. Therefore, it’s important to plan ahead and ensure that all necessary steps are taken to streamline the application process and minimize any potential delays.
Choosing the right legal structure is a crucial step in setting up a crypto exchange in Lithuania. There are several key considerations that an applicant should keep in mind to ensure that they choose the right structure for their business.
These applications include:
By carefully considering these factors, applicants can make an informed decision and choose a legal structure that best meets the needs of their business.
Obtaining a crypto exchange license in Lithuania requires a clear understanding of the steps involved in the process. By incorporating your company, drafting internal policies, finding an AML officer, increasing your share capital, and submitting your applications to the relevant authorities, you can set your business up for success.
VILP Solutions is an expert law firm in international crypto law, with a team of experienced attorneys who can provide the guidance and support you need to succeed in the blockchain industry. We are here to help you navigate the complex and constantly changing landscape of crypto law.