Geležinio vilko g. 18A, Vilnius, LT-08104, Lithuania
The Board of the Bank of Lithuania has updated its position on virtual assets and initial coin offering given the recent market developments and constantly changing regulatory framework. This was done in order to keep the pace of innovation and ensure beneficial conditions for newcomers and existing market participants.
The updates specifically relate to entities working on initial coin offerings and give Lithuanian investors an opportunity to invest in this product type. Before, the Bank of Lithuania used to operate with the concept of virtual currency, which has now been substituted by the term virtual assets that currently has a much bigger relevancy in the industry. Revisions were adopted on how and when virtual assets may be used for payments and also on the conditions for setting up investments funds. Besides, a variety of other related issues were reconsidered.
Regardless of the changes, the basis of the institution’s position did not change. Among the points that remain constant is the ban for financial market participants to participate in activities or provide services that have to do with virtual assets. There must also be a separation between the activities of the latter that leave ay virtual assets-related activities separate from the main ones. Another provision that stays in place is the inability of financial market participants to receive payments in virtual assets (only traditional currencies are allowed), which gives way to the extensive use of third-party services.
One of the revisions gives financial market participants an opportunity to create investment funds, attracting professional investors, who are interested in virtual assets. Such funds that exist outside of country’s borders must complete a notification process in order to market their units in Lithuania.
One of the key statements that the position expresses is the absence of the rights of financial market participants to accept virtual assets under the obligation to repay them, with or with no interest applied. New market models are emerging and due to this financial market participants can also issue no virtual asset loans or accept such assets as collateral. An exception to that is cases when virtual asset tokens are considered to be securities.
In any case, the position is projected to be subject to continuous reviews as the financial market continues to develop and flourish.