Lithuania Dissapoints Fintech Sector With Virtual Currency Crackdown

Regulators in Lithuania have broken from their fintech-friendly reputation by issuing tough restrictions on businesses using virtual currencies such as Bitcoin.

Last week, the Lithuanian central bank issued a notice deterring its financial sector from engaging in virtual currency activities, amid fears that profiteering from the “high risk instrument” could result in customer detriment.

“Therefore, in order to protect the customers of financial institutions, financial institutions legally operating in our country and supervised by the Bank of Lithuania must strictly dissociate themselves from this product type in their activities,” said Marius Jurgilas, a member of the central bank’s board.

“An illusion that virtual currencies are supervised or safe can in no way be created.”

The clarification comes as Lithuanian regulators are busy attempting to establish the country as one of the EU’s most fintech-friendly nations, prompting some in the industry to hope the regulator would take a more relaxed position.

“Overall, the objectives and rationale of the supervisory authority are understandable; however, a more flexible approach was expected by some market participants,” said Donatas Šliora, an associate at TGS Baltic.

“To this extent the approach of the regulator is inconsistent as they position Lithuania as a fintech-friendly jurisdiction and seek to attract innovative financial sector participants.”

The regulator’s position is not an official interpretation of any EU or domestic legislation, but Šliora said that does not mean firms can afford to ignore it.

TGS Baltic has immense experience in banking and finance matters including innovative Fintech projects. The expertise of TGS Baltic lawyers is recognised not only by long-term clients such as the European Investment Bank but also praised by market makers.