Lithuania the Latest European Country to Adopt a Crypto Law

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Everyone’s waiting for Brussels to introduce crypto legislation for years. It’s been the talk of the town for a long time, but the landmark MiCA legislation is yet to be announced. Many warn that the legislation can hurt the crypto sector and have the opposite effect.

Instead of waiting longer and see if the experiment works, some countries have decided to introduce laws on their own. Lithuania is the latest on the list, planning to jump the gun and creating its own crypto regime and regulation. In that way, the country is essentially protecting itself from a landslide of problems that could arise by delaying the MiCA legislation further.

Probably Not in Force by 2025

The MiCA legislation is the EU’s version of a crypto law. It stands short for Markets in Crypto Assets Regulation and won’t probably go live by 2025. That’s still years ahead, and not all countries in the European Union have the patience to wait that much. The Baltic nation of Lithuania seems to be jumping the gun first, introducing a set of rules that will regulate the crypto sector.

Lithuanian lawmakers have already drafted a bill that should be debated in the parliament. It’s already put fear of the future in some companies, especially those in the crypto exchange sector.

Unlike Lithuania, the EU says that MiCA is in the final stages of negotiation. It requires a single block of authorization from 27 countries and aims to transform the crypto sector by allowing businesses to tap into an industry worth billions. At least that’s what everyone hopes for, but we’ll see how it’ll work. On the other hand, many countries such as Lithuania are eager to jump into the crypto sector earlier and reap the potential rewards before Bitcoin becomes too big to handle.

One of the biggest problems with MiCA is that the transmission period before the law takes effect will last for about two years. Even when all the legal wrinkles have been ironed out, it’s still too much time for some countries, leading to some like Lithuania launching their own legislation.

Preparing for the Worst Case Scenario

Everyone’s sitting on the edge trying to imagine what MiCA’s effect will be. It could be a positive one, but it could also spell numerous problems. Lithuania’s deputy finance minister thinks that unless the country acts fast, some companies will destroy the sector’s image. The worst case scenario is a bad situation in terms of money laundering and bypassing sanctions. In short, by not acting further, he believes the sector is headed South.

Just like in Estonia, Lithuania is open to companies with a great reputation. The main draft of the new law should be in parliament this summer. Some of its highlights include €125,000 capital for every registered crypto company. Every registered company will also need to have its staff physically based in the country as part of a money-laundering policy.

The industry is already scared of the potential problems it can cause, and is hoping for a delay. But, one way or another, MiCA is coming in a few years, so even if Lithuania does nothing now, the EU will act later.

June 8, 2022: • No Comments

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