Lithuania

Bank of Lithuania Warns Binance for Unlicensed Services, Misleading the Public

by Fintechnews Baltic July 19, 2021

The Bank of Lithuania has warned a virtual currency exchange operator Binance about its unlicensed investment services provided in Lithuania and ordered the company to ensure that its publicly available information is not misleading.

The Bank of Lithuania has also noted that crypto-asset related services are not regulated or supervised, thus consumers risk losing all their investments.

The central bank notes that some online crypto-asset exchange platforms, even though they do not offer or advertise their services in Lithuania directly, enable their customers to invest in derivative financial instruments related to crypto-assets (futures and options), contracts for difference (CFD) or crypto-assets linked to securities.

Pursuant to the Republic of Lithuania Law on Markets in Financial Instruments, these means are considered financial instruments, whereas such activities where customers are enabled to place orders on transactions in the aforementioned financial instruments on their websites are considered provision of investment services – reception and transmission of orders as well as execution of orders on behalf of customers. Due to this, such services must be licensed.

The Bank of Lithuania monitors and analyses the situation and, upon noticing any unlicensed activities in Lithuania, takes measures to cease provision of such services, e.g. by blocking certain websites upon judicial authorisation.

It warns that such companies are not authorised to provide investment and other licensed services in Lithuania. Moreover, no investor protection standards are applied to their customers.

Therefore, by making transactions on such websites, they risk losing all their investments.

Companies that are registered in Lithuania as virtual currency exchange operators are not supervised as financial service providers. They also have no right to provide any financial services, including investment services.

The list of financial institutions authorised to provide investment services is published on the Bank of Lithuania website.

Taking into account 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 updated its position on virtual assets and initial coin offering back in the beginning of 2019.

The position is intended for existing and potential financial market participants as well as entities planning to organise initial coin offerings or provide the possibility for Lithuanian investors to invest in this product type.

Featured image: Bank of Lithuania