LITHUANIA Law and Practice Contributed by: Donatas Šliora and Marius Matiukas, ADON legal
To conclude, the use of blockchain is prominent within the fintech start-up economy and scarce among traditional market participants. 10.2 Local Regulators’ Approach to Blockchain Prior to entry into force of MiCA, the regulation of blockchain was scarce and relevant fintechs were only partially addressed in AML/CTF-relat - ed regulations. As mentioned previously, the Bank of Lithuania (as the supervising authority for financial institu - tions) was very careful regarding its position on crypto-assets, stating that financial institutions should not provide both financial and crypto- asset-based services through a single under - taking. Now that MiCA has entered into full effect, dis - tributed ledger technologies are regulated on a supranational level by the Regulation. The national legislative organ has also approved the Law on Crypto-Asset Markets, which designates the Bank of Lithuania as the supervisory author - ity for blockchain-based crypto-asset service providers. It specifies some of the requirements set out by MiCA to make them more cohesive with the national legislation in force, as well as the possible sanctions that may be imposed by the Bank of Lithuania in cases of failure to com - ply with MiCA and the aforementioned law. 10.3 Classification of Blockchain Assets Prior to MiCA, the only blockchain assets addressed were cryptocurrencies, through national AML/CTF legislation, which classifies cryptocurrencies as virtual currencies that have an electronic monetary value, are accepted as a medium of exchange and can be stored/ transferred/exchanged but that are not issued or backed by the government.
MiCA sheds some light as regards crypto-assets (blockchain assets) being defined as financial instruments and falling under MiFID II rather than MiCA, and regarding what crypto-assets are directly regulated under MiCA. MiCA introduces definitions of asset-referenced tokens, e-money tokens (both of which are also understood as stablecoins ) and other crypto- assets not falling under the description of the previously mentioned tokens. MiCA does not apply to entities providing crypto- asset services solely to group companies, insol - vency administrators (with limited exceptions), central banks, public authorities, the European Investment Bank and similar institutions, as well as to public international organisations. MiCA also excludes non-fungible crypto-assets (NFTs) and crypto-assets classified as financial instruments, deposits, funds (unless e-money tokens), securitisation positions, insurance products, pension products and social security schemes. ESMA has published guidelines clarifying when crypto-assets qualify as financial instruments. 10.4 Regulation of “Issuers” of Blockchain Assets MiCA covers the issuing (and issuers) of asset- referenced tokens (ARTs), e-money tokens (EMTs) and other crypto-assets not falling under the description of ARTs and EMTs. The regula - tion specifically lays out all requirements for authorisation to issue, offer to the public and admit to trading previously mentioned types of assets, while the EBA and ESMA have published Implementing and Regulatory Technical Stand - ards (ITS/RTS) further specifying the depth and detail of the authorisation process.
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