Lithuania to establish strict licensing regime for crypto companies by 2025

The move is aimed at increasing regulation of the industry as digital assets become increasingly integrated with the financial system.

The move is aimed at establishing strong regulation of the industry as digital assets become increasingly integrated into the financial system, Lithuania’s central bank board member Simonas Krepsta told Bloomberg on April 3.

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Krepsta said there are currently 580 companies operating in Lithuania, but most may not succeed in obtaining new licenses. He added that the number of crypto companies expected to meet full licensing requirements will be significantly lower than the current number of registrations.

The licensing process is expected to end before June 2025, and companies that fail to obtain a license will be forced to withdraw from the Lithuanian market.

The Lithuanian central bank will begin the pre-licensing assessment process in July. Some companies that already operate in the EU through licenses from other countries may not need to apply for a new license.

The central bank will also focus on improving its staff's understanding of crypto business models. The tightening of regulations is in response to the challenges faced by the crypto industry in a lightly regulated environment. The aim is to curb the unregulated expansion of cryptocurrency companies in the country.

Krepsta cited several cases of failures, misappropriation of funds and other financial crimes in Europe, the United States and Lithuania to illustrate the need for stronger regulation.

Strengthen supervision

Lithuania has built a reputation as a thriving fintech hub over the past decade, attracting numerous financial technology startups, including well-known companies like Revolut, which obtained a banking license in the country.

Lithuania’s move reflects a global trend that has seen financial centers including Singapore, Hong Kong and Dubai roll out broad regulatory frameworks in the digital asset space in recent years.

The European Union is also about to implement its first unified encryption regulation, the Cryptoasset Markets Act (MiCA), which is scheduled to take effect in January 2025.