Almost two years ago, the Bank of Lithuania released a blog post announcing its position on virtual currencies and ICOs.
According to the announcement, financial market participants were barred from engaging in the sale of virtual currencies and also from linking their services to virtual currencies. Otherwise, those that provide such services will have to ensure very strict compliance with the requirements for the prevention of money laundering and terrorist financing.
Today, the Board of the Bank of Lithuania is responding to ‘dynamic market developments, changing foreign positions on virtual assets and seeking to ensure a level playing field for all financial market participants.
The board has updated its position on the distribution of virtual assets as well as primary virtual assets. This position targets the already established financial market participants and also the ones seeking to distribute the virtual tokens of virtual assets in Lithuania.
The Concept of Virtual Assets Replaces the Term Virtual Currency
In as much as the two terms relate to the same thing, they are entirely different. Frequently, the term virtual currency is used to define a type of digital currency that is only available in electronic form and not physical. A virtual asset, on the other hand, is a representation of currency in some environment or situation. It can either be in the form of virtual currency or property that has value in a specific environment.
According to Lithuania’s update, the document states how and when investment funds investing in virtual assets can be created and also defines other vital issues related to virtual assets investments. It is indicated in the update that;
‘’Financial market participants should not be involved or provide services related to virtual assets, the activities should be clearly separated from the activities related to virtual assets.’’
Although financial market participants are still banned from receiving payments from virtual assets, the update has paved way for crypto payments.
This new position also provides for the creation of investment funds for professional investors looking to invest in virtual assets. Thus it ensures a level playing field for financial participants.
Also, due to the current change in market patterns, the update bans financial market participants from accepting virtual assets by committing them either with or without interest. These participants cannot provide loans or take out collateral with virtual assets.
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