- The Ministry of Finance of Lithuania is looking to ban non-custodial crypto wallets.
- The new rule also imposes stricter rules on crypto service providers operating within the country.
- The announcement comes after the recent decision of the European Union to push for anti-anonymity rules in the cryptocurrency space.
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Lithuania’s Ministry of Finance has banned anonymous wallets and imposed strict regulations on crypto exchanges in an effort to combat money laundering, terrorist financing and theft of sanctions. The ministry said it had taken this step in anticipation of future EU decisions.
Lithuania bans self-hosted wallet
The Lithuanian government is looking to pass a new law to tighten crypto regulations and make anonymous wallets illegal.
According to the Ministry of Finance, the government on Wednesday approved amendments to the “Law on the Prevention of Money Laundering and Terrorist Financing” aimed at increasing the transparency of the cryptocurrency sector as well as ensuring its “sustainable further development”. . Before being passed into law, the amendments would need to be approved by Lithuania’s legislature Seemas.
Among other things, the law seeks to ban the creation of “anonymous accounts”, tighten know-your-customer (KYC) rules for crypto exchanges, and allow managerial staff of Lithuanian-based exchanges to be Lithuania’s permanent residents. Resident is required. The Registrar of Legal Entities will also make the names of crypto exchange operators public.
These measures were justified by the Ministry of Finance as an attempt to combat money-laundering, terrorist financing, evasion of sanctions from Russia and Belarus, and reputational risks to Lithuanian market participants and the Lithuanian state.
Finance Minister Gintarė Skaist also said that the government is taking “proactive steps to strengthen regulation at the national level in order to prepare for subsequent decisions.” [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 more difficult. The law has been criticized by many cryptocurrency advocates, including Coinbase CEO Brian Armstrong.
The number of crypto companies in Lithuania is increasing rapidly after the tightening of restrictions in its neighboring country Estonia. While only 8 crypto companies were established in 2020, the Ministry of Finance says that over 220 new entities have been created since then.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.