LITHUANIA Law and Practice Contributed by: Donatas Šliora and Marius Matiukas, ADON legal
national requirements based on the European Banking Authority Guidelines on Outsourcing. In general, as financial institutions are an impor - tant market for regtechs, they must be well acquainted with the financial law of the actual jurisdiction and tailor their solutions accordingly. There is no exception to this in Lithuania. Regtechs must also ensure compliance with DORA, and that information technologies pro - vided by them are up to par with the require - ments raised by DORA if they are to keep pro - viding to the financial sector. This also requires revision of the majority of existing contracts. 9.2 Contractual Terms to Assure Performance and Accuracy If financial institutions enter into service provi - sion agreements with regtechs, they are obliged under both EU and national law to determine whether the agreement is not considered out - sourcing; if it is, they must be sure to implement mandatory contractual terms and conditions. Generally, such requirements follow the Europe - an Banking Authority Guidelines on Outsourcing – eg: • to ensure the rights of both the financial insti - tution and the supervisory authority; • to supervise the provision of the outsourced service; • to ensure that the outsourced regtech ser - vice adheres to national and EU regulatory requirements; • to ensure the safety of the data of the finan - cial institution and its clients, and that it is processed under EU law; • to regulate sub-outsourcing of the regtech service;
• to ensure that agreed service levels are met; and • to lay grounds for effective transition periods if the financial institution decides to enter into a new agreement with a different regtech, and to terminate the outsourcing agreement. In addition, some contracts must be notified to the Bank of Lithuania in advance. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry Implementation of blockchain among traditional players in Lithuania’s financial sector is scarce, and most innovations are introduced by fintech start-ups. This is unsurprising, for several rea - sons. Prior to the entry into force of MiCA, the Bank of Lithuania was holding onto the position that undertakings providing financial services should not provide crypto-asset-based servic - es – meaning that legacy and traditional market participants are either sceptical of blockchain or have not yet found any integration possibili - ties for it within the operations of the financial institution. On the other hand, the Lithuanian jurisdic - tion provides a start-up-friendly environment for fintechs. Both governmental (such as the “LBChain” sandbox environment for start-ups) and non-governmental undertakings (the Block - chain Competence Centre in Lithuania) promote the swift expansion of blockchain-based fintech start-ups in Lithuania.
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