The EU’s recent decision to restrict transfers between unhosted wallets and centralized exchanges is already having an impact.
Lithuania’s Finance Ministry is looking to ban non-custodial crypto wallets.
New regulation also imposes strict regulations on crypto service providers operating within the nation.
The announcement comes after the European Union’s recent decision to advance anti-anonymity rules in the crypto space.
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Lithuania’s Finance Ministry has banned anonymous wallets and imposed strict regulations on crypto exchanges in an attempt to combat money-laundering, terrorist financing, and sanctions evasion. The ministry stated it had made the move in anticipation of future European Union decisions.
Lithuania Bans Self-Hosted Wallets
The Lithuanian government is looking to pass a new law to tightening crypto regulations and outlaw anonymous wallets.
According to the Ministry of Finance, the government approved Wednesday amendments to the “Law on the Prevention of Money Laundering and Terrorist Financing,” aiming to increase the transparency of the cryptocurrency sector while ensuring its “sustainable further development.” The amendments will need to be approved by the Seimas, Lithuania’s legislature, before they are passed into law.
Among other things, the law seeks to ban the creation of “anonymous accounts,” tighten know-your-customer (KYC) regulations for crypto exchanges, and require managerial employees of Lithuanian-based exchanges to be permanent residents of Lithuania. The Registrar of Legal Entities will also make the names of crypto exchange operators public.
These measures were justified by the Finance Ministry as an effort to combat money-laundering, terrorist financing, sanctions evasion from Russia and Belarus, and reputational risks for Lithuanian market participants and the Lithuanian state.
Minister of Finance Gintarė Skaistė also stated that the government was “taking proactive steps to strengthen regulation at national level in preparation for subsequent decisions at [European Union] level.”
The European Parliament recently voted to advance anti-anonymity rules for the cryptocurrency industry, which would make transactions between non-custodial wallets and crypto service providers far more difficult. The legislation has been criticized by many cryptocurrency advocates, including Coinbase CEO Brian Armstrong.
The number of crypto companies has been rapidly rising in Lithuania following a tightening of restrictions in its neighboring country Estonia. While there were only 8 crypto companies established in 2020, the Finance Ministry states that more than 220 new entities have been created since then.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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