Lithuanian crypto firms face an uncertain future with tighter rules and restrictions set to come into force in June 2025.
Regulators are set to significantly reduce the crypto sector, meaning many companies in the Baltic state may be forced to close in a year’s time.
Reports from Bloomberg suggest that the vast majority of the 580 registered crypto firms will not meet the incoming licensing requirements.
The intended new rules aim to protect crypto users from scams and heighten anti-money laundering protections. The more robust AML protocols will be introduced in January 2025.
Lithuania Crypto Firms
“The crypto industry failed in a lightly-regulated environment. We have quite a lot of evidence of that in the US, other European countries but also Lithuania.
“We saw quite a number of failures, embezzlement cases and similar which were quite a blow for the industry,” said Bank of Lithuania board member Simonas Krepsta.
The expected transition has already seen the Lithuanian central bank provide fresh training on crypto business models. A pre-assessment phase will also be in place.
Lithuania aims to provide a more reputable crypto environment for all users. Even if that means drastically reducing the number of firms.
The Markets in Crypto-Assets (MiCA) – which was established in 2020 – is intended to help streamline virtual asset regulation in the European Union.
In essence, they create the framework for crypto firms to protect users and investors. Therefore, the new rules will need to be demonstrated to satisfy MiCA moving forward.
The move by Lithuania is one of the first of its kind and is likely to set the trend for other nations to follow. USA and China are prime examples who may introduce such measures in the future.
With that said, if it proves successful in Lithuania, other countries may be forced to implement the new rules and regulations to protect crypto users and companies.
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