PREPARATION FOR A SMOOTH TRANSITION TO MICA IN LITHUANIA
The Markets in Crypto Assets Regulation (MiCA) entered into force in June 2023 following its publication in the Official Journal of the European Union. Generally, the MiCA is an essential development towards establishing a unified regulatory framework within the European Union (EU) for regulating and supervising the activities of the issuance, trading and provision of services in relation the crypto assets.
According to the European Securities and Markets Authority, the current regulatory environment for the crypto-asset sector in the EU is highly fragmented. Some EU Member States have introduced national rules regulating specific crypto-assets or crypto services/products. The majority of these national frameworks stem from the implementation of the 5th Anti-Money Laundering Directive. For example, Lithuania has not only implemented the 5th Anti-Money Laundering Directive into its legislation, but has also proactively adopted stricter national requirements concerning the activities of the virtual asset service providers.
Under the MiCA, its rules related to the provision of crypto-asset services will apply in full from 30 December 2024. However, the MiCA allows EU Member States to apply an additional 18-month “transitional period” (i.e., until 1 July 2026) to entities already providing crypto asset services within their jurisdictions, during which such entities can continue their business activities without the MiCA license. The exact date of transitional period may vary from jurisdiction to jurisdiction, depending on how each Member State decides to apply (or not apply) the optional transitional measures. In the case of Lithuania, on 07 December 2023 the Ministry of Finance of Lithuania (MoF) has proposed to waive the transitional period in Lithuania and to start implementing the MiCA's requirements earlier (from 30 December 2024). However, on 14 March 2024 the MoF changed its position and proposed to introduce the transitional period until 1 June 2025 in updated draft legislation. Eventually, the Lithuanian Parliament has approved the law establishing the shortened transitional period proposed by the MoF.
Considering the benefits of MiCA (e.g., passporting rights within the EU) and the potential risk of business disruption due to adjustments resulting from the implementation of MiCA’s requirements, crypto companies are recommended to make proper preparation plans and to start dialog with the regulator regarding the application of MiCA’s framework to their current activities and MiCA authorization as soon as possible.
Our team is ready to help existing and new crypto market participants to prepare for the implementation of the requirements related to MiCA and to initiate the communication with the Bank of Lithuania, which shall be granting MiCA licenses and carrying out supervision in Lithuania.
Last update: 11-07-2024
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