The Central Bank of Lithuania has officially updated its views on ICOs (initial coin offerings) and digital assets, according to an announcement published last week. The announcement stated that the bank’s intentions were to provide financial market participants (FMPs) with a “level playing field.”
The first document to officially establish the bank’s views on ICOs and digital assets was published in October of 2017. The document specified which terms FMPs may establish investment funds for virtual assets, and created parameters for how and when virtual assets can be used for payment.
The most recent announcement tells that although the bank has not made significant changes to its underlying principles, it now allows the creation of funds for professional investors that include digital assets. The new policy also allows crypto payments received by private companies to be processed by third-party exchanges into local fiat currency.
However, there are some caveats: FMPs are forbidden to accept digital assets with the requirement to repay them with or without interest.
Additionally, FMPs are prohibited from issuing virtual asset-based loans and from accepting virtual assets as collateral, unless they can be legally considered as securities.
The bank also emphasized that FMP should still make efforts to separate their traditional financial services activities from activities associated with digital currencies and that indeed, FMP should not participate in or provide virtual currency-associated services at all.
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Lithuania’s Crypto Industry is Growing
The announcement is likely in part a result of a regulatory seminar held last October to examine the “threats and potential benefits” of ICOs to the Lithuanian economy. CoinTelegraph reported that the high volume of ICO turnover (roughly $567 million) in the country prompted a need for tougher anti-fraud measures.
It was also noted at the seminar that “according to ICO figures, Lithuania is one of the world leaders and shows the highest, 305 percent, growth from all over the world.”
The Central Bank of Lithuania announced in April of 2018 that it was exploring the possibility of issuing its own digital currency. Currently, the bank is in the second stage of its LBChain project, an initiative to support companies who are developing blockchain-based products.
A unique opportunity! The Bank of Lithuania is is looking into the possibility of issuing a digital collector coin. Have a hand and suggest technology for the coin. Registration to the #hackathon is open now https://t.co/adehkO2InQ pic.twitter.com/m33aPRFDzk
— Lietuvos bankas (@Lietuvosbankas) April 25, 2018