LITHUANIA Law and Practice Contributed by: Tadas Kuzminskas, APB “Leagus”
1.2.5 Insolvency Lithuania has no separate winding‑up or insolvency regime specifically for blockchain or crypto‑asset firms; however, the Law on Crypto‑Asset Markets establishes certain specific provisions regarding the bankruptcy and liquidation of CASPs. Key points: • bankruptcy proceedings against a CASP may be conducted only through court procedure; • the supervisory authority has the right to file a peti- tion with the court to initiate bankruptcy proceed- ings against a CASP; • if a petition to initiate bankruptcy proceedings is filed by other persons, the court must obtain the supervisory authority’s opinion on the CASP’s bankruptcy before deciding whether to open pro- ceedings; and • a CASP may be reorganised or liquidated by a decision of its general meeting of shareholders only after obtaining prior permission from the supervi- sory authority to do so. 1.2.6 Industry and Trade Bodies The Crypto Economy Organisation (CEO) is an inde- pendent, government-supported association dedi- cated to advancing the crypto economy in Lithuania. 2. Regulation 2.1 Regulators and International Alignment The key Lithuanian regulators are as follows. • Bank of Lithuania ( Lietuvos bankas ) – Supervisor of banks, EMIs, payment institutions and CASPs. The Bank of Lithuania issues CASP licences and supervises their activities. • Financial Crime Investigation Service ( Finansinių nusikaltimų tyrimo tarnyba ) – Receives, analyses and disseminates reports of suspicious financial activity to combat AML/CFT and related crimes. Monitors compliance with AML/CFT obligations for certain non‑bank obliged entities, issues guidance, can initiate administrative measures and refers serious cases for prosecution.
For example, an unclear source of funds, undisclosed ultimate beneficial owners or the poor reputation of beneficial owners, or a client base that is outside the EU, may justify a bank’s refusal to provide services. Banks also commonly require transactional transpar- ency, segregation of client funds, robust know-your- customer (KYC)/enhanced due diligence (EDD), AML monitoring systems and contractual audit/access rights. 1.2.3 ESG/Sustainable Finance There is no Lithuania-specific ESG regime for digital assets, but EU sustainable‑finance rules can apply to crypto‑related activities depending on the entity and activity. For example, the Sustainable Finance Disclosure Regulation (SFDR) applies in Lithuania. The SFDR requires financial market participants (eg, investment firms, alternative investment fund manag- ers, credit institutions that provide portfolio manage- ment, etc) to disclose how they integrate sustainability risks and handle negative impacts on the environment, society, and corporate governance. The Markets in Crypto‑Assets Regulation (MiCAR) requires issuers of crypto-assets and service providers to disclose information regarding the environmental and climate- related impact of the crypto-assets they issue or man- age. When a crypto-asset is considered a financial product and thus falls under the scope of the SFDR, it must comply with the SFDR’s disclosure requirements regarding sustainability risks and impacts. 1.2.4 Tax Lithuania’s tax practice has adapted to digital assets by treating crypto‑assets as taxable assets for income tax purposes, but several uncertainties remain, for example: • whether a token is a security token, a utility token, or falls into neither category, as tokens may be taxed differently depending on their classification; • how to characterise staking rewards, liquidity‑pro- vider fees and protocol incentives (taxable income versus return of capital) and when they should be taxed; and • how to ensure sufficient documentation and robust valuation methodologies for tax audits, which is often challenging in practice.
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