Bank of Lithuania’s Position on Virtual Assets and ICOby Fintechnews Baltic February 25, 2019
Taking into account current market developments and evolving regulatory regimes as well as seeking to ensure a level playing field for all financial market participants, the Board of the Bank of Lithuania has updated its position on virtual assets and initial coin offering.
The position is intended for existing and potential financial market participants as well as entities intending to organise initial coin offerings or provide the possibility for Lithuanian investors to invest in this product type.
The term virtual currency, which was used in the previous version of the position, has been substituted with the term virtual assets. The position defines how and when virtual assets may be used for payment, specifies when and how financial market participants may set up investment funds for investment in virtual assets, as well as addresses other relevant issues.
The underlying principles of the position, however, have remained unchanged: financial market participants should not participate in activities or provide services associated with virtual assets; they should also ensure separation of their activities from activities associated with virtual assets. Although financial market participants are still prohibited from receiving payments in virtual assets, the position provides for the possibility of using third-party services. Payments to a financial market participant’s account can only be made in traditional currencies, thus no additional risks are entailed.
Seeking to ensure a level playing field for all financial market participants, the updated position allows creating investment funds intended for professional investors that would invest in virtual assets. Such funds are prevalent in other countries; having completed the notification process, their investment units may be marketed in Lithuania.
The position states that financial market participants are not allowed to accept virtual assets with the obligation to repay them with or without interest. Given the emergence of new market models, financial market participants are also prohibited from issuing virtual asset loans or accepting virtual assets as collateral (except for cases where virtual asset tokens are considered to be securities).
The position will be reviewed on a regular basis, upon the assessment of financial market developments. The first version of the position was published on 31 January 2014, warning consumers about potential risks that virtual currencies entail.
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