The country decided to take action in advance of the EU regulations that could ban noncustodial wallets.
The 2.8 million-strong nation of Lithuania plans to increase its surveillance over crypto in its fight against money laundering and possible schemes by Russian elites to circumvent financial sanctions.
The local Ministry of Finance declared Wednesday that various ministries of the Lithuanian government had approved legal amendments to Anti-Money Laundering and Countering the Financing of Terrorism in the Crypto Sector. If approved later by the Seimas (Lithuanian legislature), the amendments to the current law would tighten guidelines for user identification, and ban anonymous accounts.
New regulations will also make it more difficult for exchange operators to comply with the new regulations. They will have to register as a corporate entity with a nominal capital of not less than 125,000 euros starting Jan. 1, 2023. These companies’ senior management would need to be permanent residents of Lithuania.
This announcement justifies tightened regulations in light of the rapid growth of crypto and geopolitical risk.
“A more nuanced regulation for the suppliers of crypto services is also important, considering the international regulatory tendencies as well as the geopolitical position in the region where many Western countries impose financial or other sanctions on Russian Federation.
Minister Gintare Skaiste, Minister of Finance, stated in her official commentary that all steps taken at the national level are in line with the forthcoming pan-European regulations. This announcement highlights the rapid rise of crypto businesses in the country following tighter regulation in Estonia. In 2020, there were only eight new companies; in 2021, there were 188.
Similar: The support sanctions offer an opportunity for the crypto industry to rebrand
In September 2021, Estonia published its update to the AML Act. The amended law effectively prohibited noncustodial financial products and software wallets. The European Parliament approved an AML regulatory program that could place severe disclosure requirements on transactions among noncustodial wallets or crypto exchanges within the European Union.
Cointelegraph was informed by a representative of Ministry of Finance that the new legislation does not intend to shut down international crypto companies, but rather emphasizes that they must have sound business models that comply with relevant regulations.
“Crypto companies must have a senior manager who is a permanent resident of Lithuania. This new requirement is designed to improve communication with supervisory institutions and ensure the connection to the local markets.”
The parliament must still adopt the draft law, as the speaker explained. The law will be amended on November 1, 2022. Most of the key provisions will take effect on January 1, 2023.
