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How to Obtain EMI and Crypto Licenses in Lithuania

calendar 8/16/2021 8:00:00 AM
author Admin System

All of Lithuania’s Financial Services is regulated by the Bank of Lithuania. It supervises all companies ranging from credit institutions, payment service providers, electronic money institutions, investment firms, consumer credit firms, and insurance providers.

E-money or Electronic money is the digital equivalence of cash, and it can either be hardware or software-based. This is where money is stored on a card, a wallet, or an electronic purse.

The Lithuanian Legal Framework for Electronic Money was established by the 2000/46/EC directive. This was an attempt to modernize the framework for electronic money issuance, which enabled innovation.

In 2017, 68% of Europeans used electronic money, and 84% of Europe’s active online users make use of it as well. Research shows that the number of e-wallet users is set to go up. It is estimated that the mobile payments in Europe will triple by the end of this year, and it will grow to €148 billion from €52 billion.

Some of these statistics result from Lithuania becoming the new Fintech hotspot of the EU region, and its clear legal framework, fintech-friendly environment with a stable political and business environment has contributed significantly to this rise in e-wallets.

The Global Fintech Index reported that Lithuania was in 4th place as one of the best fintech-promoting countries in the world.

There are currently 74 E-money and 39 payment institutions operating in Lithuania, and in 2020, the government issued 15 e-money licenses and five payment licenses. In 2021, there is an expectation of new initiatives and regulations from the government to make this sector even more competitive and flexible.

They are building a new framework for addressing all of the risks posed by providing these digital financial services. 

EMI Licensing and Authorization

When applying for this license, you will need to have a pre-application meeting with the representative from the Bank of Lithuania. Your company’s representatives should also be at the meeting. Initially, there will be a question and answer session from both sides, but the bank will seek to find out the kind of financial services you will be providing.

Next, you will be required to submit an application form for the license to the supervision department of the bank of Lithuania. Within the next five business working days, the supervision service should have reviewed and notified you on whether you submitted all of the necessary documentation. In case there aren’t any formal issues, then they will accept your application for consideration.

The license will then be issued if the supervisory department is okay with all the documentation, or they may deny the application, and you do not receive the license.

How much does it cost?

-The cost of an E-money licensing fee in Lithuania is EUR 1,463

-The price for a small e-money license is EUR 1,235

-A PI license fee is EUR 898

Requirements for an EMI license

The company's founders must first undergo a screening process with the CCSSO, which is a separate licensing procedure.

The management structure must be specified – the EMI Company should have a CEO and a board with a minimum of three members.

All other key personnel should be identified. You must have an anti-money laundering officer and an information security officer as well. You must prove that these relevant employees possess the relevant experience and qualifications to hold these positions.

The Capital Requirement

For EMIs, the initial capital requirement is EUR 350,000. The Bank of Lithuania will require a capital buffer. This buffer size depends on the business calculations. The smaller EMIs are, however, not subject to the minimum capital requirement.

Partnership Agreements

Before you submit the documentation for the license, ensure that you have a clear vision of your technical solutions, such as accountants, and that you have already drafted the outsourcing agreements and all the other agreements with parties involved in the process of service provision.

Cryptocurrency License

Any company that receives a virtual currency or cryptocurrency license must provide services for circulating, exchanging, storing, and transferring cryptocurrency and virtual currency to their customers worldwide or in the local offices within Lithuania.

Lithuania has a regulated and friendly legal environment for the exchange of cryptocurrencies and crypto-wallets. The companies are provided with clear regulations that have been in place since 2020. Some onsite lawyers offer solutions to wallet licenses and crypto exchange setups.

The whole process is fully remote, and no travel is required. In fact, Vilnius, the capital of Lithuania, is Europe's fintech capital and receives plenty of attention for its regulations for crypto exchange services and licensing.

When you compare this to its neighboring Estonia, the regulations in Lithuania are viewed as being more flexible in terms of setup and have lower costs. There aren’t any specific requirements for personnel.

Types of Crypto Licenses

Lithuania offers two main types of crypto licenses for their virtual currency operations, which are;

-Exchange of Virtual Currency (Crypto) Against Fiat Currency

-The Virtual Currency Wallet Service

These are both supervised by the Lithuanian Financial Crime Investigation Service (FCIS). It would be best to prepare all of the required compliance and legal documentation for managing the process remotely without traveling.

One company can also hold both licenses. The regulator review for the application is usually one month.

Company structure for a Lithuanian Cryptocurrency License

To apply for a crypto license in Lithuania, you must first set up your UAB, or Limited Liability Company in Lithuania. This has a minimum share capital of 2500EUR. The company can be fully remote with no visits required. It usually takes roughly ten business working days for it to be approved.

The minimum company structure is currently just one person, acting as the director, shareholder, and compliance officer. However, to pass as a compliance officer, you should have previous work experience and the right supportive documentation.

Lithuanian Residency is not required. Once licensed, you must keep an up-to-date overview of your transactions and clients as per the KYC/AML regulations. 

The FCIS regulator can make inquiries on the company's activities at any time, especially in regards to adherence to the pre-defined KYC AND AML policies. 

General Requirements for a Crypto License

-Taxation information

-Banking information

-Company information; This should be as follows;

-The company should have at least one shareholder, either a corporate or private entity. There should be no citizenship or residency restrictions.

-There should be at least one board management member who can also be the shareholder. No restriction to residency or citizenship and foreign residents are allowed. 

-An AML compliance officer is required, who can also be the same board member.

-Although a virtual office is also acceptable, there must be a local office set up for the business.

-The beneficial owner’s details should be disclosed to the authorities as well.

The Legal Framework and Requirements

The Money Laundering governs this and Terrorism Financing Prevention Act, specifically Order No. V5 of January 2020. This regulation provides for the operators of custodian wallets and crypto exchanges.

MUNDO, together with its highly professional partners, is ready to assist you in getting the Lithuanian licenses required for your business. 

Don't hesitate to contact us! 

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