Lithuania

## Report: Retail_Trading_Status in Lithuania

**Date:** 2025-06-26

**Topic:** Retail_Trading_Status

**Description:** Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

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### Retail_Trading_Status: Lithuania

**Identified Status:** Allowed-Regulated

**Narrative Explanation:**

Retail cryptocurrency trading is legally permitted in Lithuania for individual citizens and residents. The country has established a regulatory framework primarily focused on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) for cryptocurrency-related activities. The Bank of Lithuania, the country's central bank and financial supervisory authority, has clarified its stance over the years, moving from initial warnings about the risks associated with cryptocurrencies to a more defined regulatory approach, especially concerning virtual currency exchange operators and depository virtual currency wallet operators.

Initially, in 2017, the Bank of Lithuania issued warnings highlighting the risks of virtual currencies, emphasizing their speculative nature and lack of consumer protection. However, Lithuania has since taken steps to regulate the sector, particularly by amending its Law on Prevention of Money Laundering and Terrorist Financing to include entities operating with virtual currencies. These entities, such as cryptocurrency exchanges and wallet providers, are now subject to KYC/AML requirements, including customer identification and verification, transaction monitoring, and reporting of suspicious activities to the Financial Crime Investigation Service (FCIS).

The regulatory landscape is also significantly shaped by European Union directives and upcoming regulations. The EU's Markets in Crypto-Assets (MiCA) regulation, which is progressively coming into force, will provide a more comprehensive and harmonized framework for crypto-assets across member states, including Lithuania. This will further solidify the "Allowed-Regulated" status by introducing licensing requirements for crypto-asset service providers (CASPs), investor protection rules, and market abuse provisions. Lithuania, as an EU member, is expected to fully implement MiCA.

While direct retail trading by individuals is permitted, the Bank of Lithuania maintains a cautious approach, particularly regarding financial institutions under its supervision. For a period, the Bank of Lithuania held a position that financial institutions should not engage in activities or provide services related to virtual currencies. However, this stance has evolved. The Bank of Lithuania has clarified that while it continues to advise caution, it does not outright prohibit financial institutions from providing services to entities dealing with virtual currencies, provided robust AML/CTF measures are in place.

The Ministry of Finance of the Republic of Lithuania has also been involved in shaping the regulatory environment, particularly concerning the taxation of income from virtual currency transactions. Income derived from the sale or exchange of cryptocurrencies is generally subject to personal income tax.

In summary, individuals in Lithuania can legally buy, sell, and hold cryptocurrencies. The activities of service providers facilitating these transactions are regulated, primarily under AML/CTF laws, with a more comprehensive EU-wide regulatory framework (MiCA) set to enhance this regulation.

**Relevant Text Excerpts and Sources:**

*   **Bank of Lithuania (Position on Virtual Currencies and ICOs - updated 2019, though the core message on AML remains relevant and has been built upon):**
    *   "Virtual currency exchange operators and depository virtual currency wallet operators are subject to requirements related to the prevention of money laundering and terrorist financing." (Summary of the implications of AMLD5 transposition)
    *   The Bank of Lithuania has consistently emphasized that "virtual currencies are not considered legal tender" and has warned consumers about their risks. However, this does not equate to a ban on individuals trading them.
    *   While older positions urged financial institutions to avoid virtual currencies, the focus has shifted to ensuring AML/CFT compliance for entities that do engage with them. The Bank of Lithuania's more recent communications and actions align with the broader EU movement towards regulating the crypto-asset space rather than banning it.

*   **Financial Crime Investigation Service (FCIS) under the Ministry of the Interior of the Republic of Lithuania:**
    *   The FCIS is the authority responsible for overseeing AML/CTF compliance for crypto-asset service providers. Their website and guidelines detail the obligations for these entities, which implicitly confirms that such services can be offered if compliant.
    *   "Virtual currency exchange operators and (or) depository virtual currency wallet operators must comply with the requirements of the Law on the Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania, including customer due diligence and reporting obligations." (Paraphrased from typical AML guidance for obligated entities).

*   **Ministry of Finance of the Republic of Lithuania (Taxation):**
    *   Guidance provided by the State Tax Inspectorate (VMI) under the Ministry of Finance clarifies that income from cryptocurrency transactions is taxable, indicating the legality of such transactions for individuals. For example, "Income from the sale of virtual currency is taxed as income from the sale of other property."

*   **EU Regulation - Markets in Crypto-Assets (MiCA):**
    *   "This Regulation lays down uniform requirements for the offer to the public and admission to trading of crypto-assets... and for the provision of certain crypto-asset services." (Excerpt from the official text of MiCA). As an EU regulation, MiCA will be directly applicable in Lithuania, further solidifying the regulated status of crypto trading. It establishes a licensing regime for CASPs and consumer protection rules.

**Direct URL Links to Sources:**

*   **Bank of Lithuania:**
    *   General information and positions (though specific older documents might be archived, the overall regulatory direction is evident through their current AML/CFT focus and alignment with EU regulations): [https://www.lb.lt/en/](https://www.lb.lt/en/)
    *   Information on AML/CFT for financial market participants (which includes crypto-related entities): [https://www.lb.lt/en/aml-cft-and-sanctions-1](https://www.lb.lt/en/aml-cft-and-sanctions-1)

*   **Financial Crime Investigation Service (FCIS):**
    *   Information on AML/CTF obligations for relevant entities: [https://fNTT.lrv.lt/en/](https://fNTT.lrv.lt/en/) (Note: The exact URL for specific crypto guidelines may require navigating the site, but this is the main portal for the FCIS).

*   **State Tax Inspectorate (VMI) under the Ministry of Finance:**
    *   Taxation information (often found in FAQs or specific guidance sections): [https://www.vmi.lt/evmi/en/pradinis](https://www.vmi.lt/evmi/en/pradinis)

*   **Markets in Crypto-Assets (MiCA) Regulation (Official Journal of the European Union):**
    *   The full text of the regulation: [https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023R1114](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023R1114)

It is important to note that the regulatory landscape, especially concerning cryptocurrencies, is dynamic. The implementation of MiCA will bring further clarity and potentially new requirements.