Lithuania's Cryptocurrency Surge Raises Concerns for Regulators Amid Money Laundering Fears

Business | December 13, 2023, Wednesday // 16:07
Bulgaria: Lithuania's Cryptocurrency Surge Raises Concerns for Regulators Amid Money Laundering Fears

Lithuania finds itself at the forefront of cryptocurrency expansion within the EU, boasting one of the largest counts of crypto companies. However, this surge has prompted regulators to sound the alarm, citing concerns about potential misuse for money laundering and criminal endeavors, as reported by Latvian public electronic media.

Estonia's law enforcement, in collaboration with the US Federal Bureau of Investigation, arrested two individuals involved in a half-billion-euro cryptocurrency scheme in October 2022. This incident spurred Estonia to tighten regulations on cryptocurrency-related operations, leading to a migration of numerous "virtual entrepreneurs" to Lithuania, as noted by the Latvian Central Bank (LCB).

The director of the Latvian Central Bank, Gediminas Šimkus, expressed unease regarding Lithuania's status as the leading EU country in the number of cryptocurrency companies. "This indicator does not evoke good emotions; it's a signal that we are facing a serious challenge," remarked Šimkus.

Financial Crimes Investigation Office (FCI) findings reveal that nearly half of these crypto firms failed to submit any transaction reports, raising red flags for potential money laundering and illicit financing. Moreover, concerns arise over the circumvention of sanctions by Russia and Belarus through the use of cryptocurrencies.

Investigations disclosed several companies registered at a single address, while approximately one-third of these entities have only one or two employees. Notably, shareholders among the 500-plus crypto firms hail from over 60 countries, with a significant presence from Ukraine, the UK, Estonia, and some under scrutiny from Russia.

Despite impending EU regulations in 2025, Lithuanian authorities are expediting their own legislation, anticipated to be enforced by year-end, aiming to preemptively regulate the crypto sector. Interior Minister Agne Bilotaite stressed the need for national-level tools to regulate and control the industry until EU regulations are in place.

The proposed Lithuanian law mandates crypto companies to maintain a minimum capital of 125,000 euros, intended to apply universally instead of solely to licensed entities. The FCI retains the authority to suspend or prohibit services for non-compliance with the law.

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Tags: Lithuania, cryptocurrency, regulations, money

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