Lithuania, once a welcoming hub for financial technology upstarts including crypto companies, is cracking down on the largely unregulated digital assets sector as it implements the European Union’s new crypto regulations next year.
The Baltic nation established itself over the past decade as a magnet for innovative fintech firms like Revolut, which obtained a banking license there. But its light-touch approach also attracted hundreds of crypto businesses operating without oversight, some of which engaged in fraud, misuse of funds and other misconduct.
“The crypto industry failed in a lightly regulated environment,” Simonas Krepsta, a board member at the Bank of Lithuania, said in an interview. “We saw quite a number of failures, embezzlement cases and similar which were quite a blow for the industry.”
Of the roughly 580 crypto firms currently registered in the country, authorities expect a “much lower” number will obtain full operating licenses by the June 2025 deadline.
The licensing process reflects a broader global push to regulate the crypto sector following a string of high-profile blowups and scandals. Those that fail to secure permits must “leave the ecosystem,” Krepsta warned.
To prepare for the licensing onslaught, the central bank has been staffing up and training employees on the business models and risks of crypto firms.