The Bank of Lithuania has reportedly begun looking into cryptocurrencies, initiating a dialogue between commercial banks, government regulators, and crypto traders, local news outlet The Baltic Times reports today, April 15.
The central bank had invited representatives from the Financial Ministry, the Financial Crime Investigation Service (FNTT), the banking sector, and the Initial Coin Offering (ICO) sector to a recent crypto roundtable, according to Jekaterina Govina, the fintech strategy coordinator at the Bank of Lithuania.
Govina notes that regardless of the risks associated with cryptocurrencies, “blind denial, reluctance to understand and to work with the cryptocurrency world leads nowhere,” continuing:
“It’s necessary that banks speak to those who have carried out an ICO or those who convert cryptocurrencies into conventional money. A dialog has been established and it remains to be seen where it will lead us.”
Lithuania’s central bank issued a document on Oct. 10 of last year detailing its position towards ICOs and cryptocurrencies. In the doc they state that financial market participants (FMP) should separate their financial services activities from those associated with virtual currency. It also states that FMP should In providing financial services to customers who are engaged in activities associated with manage the risks of money laundering and terrorism financing when providing financial services to customers who are dealing in crypto.
According to The Baltic Times, although Lithuania’s central bank requires a “clear separation” between traditional financial services and crypto-related activities, the bank will “issue licenses cheaply and quickly” – evidently for ICOs – as well as accept license applications in English, as part of its goal to become a “European fintech hub”.
Reportedly, one problem for crypto-related business in Lithuania is the difficulty of working with banks, according to Vytautas Kaseta, a board member at Blockchain Center Vilnius:
“Commercial banks don’t understand the nature of the crypto-business and the business model. Therefore, they regard it as a high-risk business and require additional proofs of the origin of money and investment, and often refuse to open accounts for companies.”
In response, the Lithuanian Banks’ Association (LBA) has said that while a dialogue is needed, the potential for crypto to play a role in illegal activities means that there is a necessity for proof of a client’s source of funds:
“We are interested in speaking to everyone to better understand each other’s business models, but consumer protection, money laundering and terrorist financing prevention is a priority that must be ensured. We understand from the meeting that some of cryptocurrency market participants cannot say where the money comes from. This is a serious problem, and they didn’t realize it was a problem.”
In November of last year, the finance ministers in Lithuania, Estonia, and Latvia signed a Memorandum of Understanding for fintech cooperation, including supporting Blockchain innovation across the Baltics.