Lithuania stands out within the European Union as one of the few member states where cryptocurrency-based financial transactions are fully legalized. Between 2019 and 2020, the Lithuanian Financial Crime Investigation Service (FCIS) established a comprehensive legal framework for virtual assets and initial coin offerings (ICOs). This initiative created a clear, compliant, and welcoming environment for businesses offering cryptocurrency exchange services and crypto wallet solutions.
Due to its regulatory flexibility, lack of strict requirements for company directors or shareholders, and overall cost efficiency, Lithuania has become a preferred jurisdiction for many crypto businesses seeking EU compliance.
Since 2020, major global exchanges like Binance have operated under licenses granted by Lithuanian authorities. This guide provides a detailed overview of the types of crypto licenses available in Lithuania and their application process.
Types of Lithuanian Crypto Licenses
The FCIS issues two distinct types of licenses for virtual asset service providers (VASPs):
Cryptocurrency Exchange License
This license covers services that involve exchanging fiat currency for crypto, crypto for fiat, or converting between different cryptocurrencies. It is essential for operating a crypto exchange platform.
Crypto Wallet and Custodian Services License
This authorization is required for businesses that generate encryption keys for clients or safeguard cryptographic keys used to store, manage, and transfer virtual currencies.
Key Application Requirements
To apply for either license, companies must fulfill the following conditions:
- Establish a Local Entity: Found a private limited liability company (UAB) in Lithuania specifically for offering crypto exchange or storage services. The UAB must have at least one owner (which can be a natural person or legal entity) and one managing director authorized to represent the company.
- Clean Criminal Records: All members and ultimate beneficial owners (UBOs) of the company must provide certified criminal record checks.
- Appoint an AML Officer: Designate an Anti-Money Laundering (AML) compliance officer with relevant professional experience and an untarnished reputation. The officer is not required to be a resident of Lithuania.
- Implement KYC Procedures: Enforce robust background checks and identity verification (KYC) processes for all customers.
- Maintain Records: Securely store all customer data and transaction records for submission to regulators upon request.
- Develop Internal Protocols: Establish detailed internal control, risk assessment, and compliance procedures.
- Submit Participant CVs: Provide comprehensive resumes for all key project participants and individuals in senior positions.
- Regulatory Reporting: Be prepared to report to the FCIS regularly and upon request.
- Adhere to AML/KYC: Strictly follow all local and EU Anti-Money Laundering and Know Your Customer regulations.
Tax Regulations for Crypto Businesses
Corporate Taxation
- Profits generated by cryptocurrency companies are subject to a standard corporate income tax rate of 15%.
- Micro-enterprises with fewer than 10 employees and annual revenue under €300,000 may qualify for a reduced tax rate of 0-5%.
- Value Added Tax (VAT) is not applied to virtual currency exchange services themselves. However, services paid for with cryptocurrency are subject to standard VAT rules.
- A 15% withholding tax (WHT) is applied to distributed profits (dividends).
Taxation of Crypto Transactions
The tax treatment of individual virtual currency transactions depends on their nature. If a token is deemed analogous to a security, investment, or currency, it may be exempt from direct taxes. All virtual currency transactions must have their value declared in Euros for tax purposes under Lithuanian VAT rules.
For a deeper understanding of how these tax structures might apply to your specific business model, 👉 explore more detailed regulatory guidance.
Frequently Asked Questions
Why should a company choose to get a crypto license in Lithuania?
Lithuania offers one of the most favorable regulatory environments for crypto projects in Europe. The application process is notably faster and more cost-effective than in many other EU countries. Enterprises can often secure the necessary licenses within 1-2 months, and the associated legal and financial costs are significantly lower.
How long is a Lithuanian cryptocurrency license valid for?
Once granted, a cryptocurrency license in Lithuania is issued for an indefinite period, provided the licensee remains compliant with all regulatory obligations.
What are common challenges or reasons for license revocation?
The most frequent issue leading to license revocation is a change in the company's ownership structure that is not reported to the FCIS. Another common problem is the appointment of an AML officer who lacks the requisite experience or fails to perform their duties adequately.
Can non-residents own a crypto company or serve on its board in Lithuania?
Yes. Foreign nationals and non-residents are permitted to fully own a Lithuanian crypto company and hold positions on its board of directors. There is no requirement for them to be physically present in the country.
What is the minimum share capital requirement?
The minimum authorized share capital required is €2,500. This capital must be fully paid up from a personal bank account into the company's account at a Lithuanian bank or electronic money institution before the license application is submitted. Payment via cryptocurrency is not permitted.
What is the process and timeline for obtaining a license?
There are two primary pathways: acquiring an existing pre-licensed company (which can be completed in about one month) or applying for a new license (which typically takes 3-4 months for regulatory review and approval).