Central Bank of Lithuania again discourages institutions on the use of virtual currencies

The Central Bank of Lithuania has unveiled its most up-to-date position on crypto-assets and ICO’s. The institution encourages banks to retain the services offered by companies using electronic currencies and said that currency offers should be regulated as methods to obtain tokens of value.

According to the established in a recent publication with the signature of the bank:

“Participants in the financial market should not participate in virtual currency sales or start up any operations involving them, as well as participation in exchange houses … Companies should not link their services to cryptographic tokens because they believe so an impression that such functions are subject to relevant safety standards. “

Marius Jurgilas, one of the board members of the institution, commented:

“Virtual currencies are high-risk instruments, as their speculative component can translate into significant capital losses. Therefore, the financial institutions that are supervised by the Central Bank of Lithuania must move away completely from these assets and thus protect their clients. Creating the illusion that electronic currency is supervised is inconceivable.”

The communiqué also stresses:

“Those who decide to provide financial services to customers offering cryptocurrencies should ensure compliance with the requirements for the prevention of money laundering and the financing of terrorism.”

The publication also clarifies the specific criteria of the Central Bank of Lithuania on money based on Blockchain. The entity states that when an ICO specifies characteristics of the token that it is offering, the distribution must be subject to the legal parameters established in the securities law; that is, the representatives of the bank make clear that the regulations may differ depending on the particularities of each ICO, stating that in these cases the projects must be analyzed meticulously.

In view of all the parameters exposed, Jurgilas concludes:

“In essence, ICO’s are the collection of funds invested by taxpayers – often informal – to finance a particular project. Considering that the risk of losing users’ money is particularly high, our view is that such a financing method, in many cases, should be subject to regulatory guidelines.”

It should be noted that, in recent years, Lithuania’s position around cryptocurrencies has changed on numerous occasions. As early as 2014 the bank issued a statement that focused on reporting the risks involved in investing in digital assets, ruling Bitcoin as a non-legal currency and recommending that the country’s financial institutions not enter their market … ended there and in 2016 the Deputy Minister of Economy of Lithuania stated that several officials of the country were exploring the capabilities of Blockchain technology, stating that they believed in their potential and the great innovation that had brought the world of finance. However, the “new” Central Bank verdict may well lead to disillusionment among members of the community.