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Lithuanian Crypto Boom Raises Money Laundering Fears

The small Baltic economy is near the top of the global table for ICOs and cryptocurrency startups.

28 June 2018

Thanks to its flexible regulations and its open approach to digital currency, Lithuania has become an attractive destination for crypto investors. The country has attracted around 10 percent of all global “initial coin offerings” (ICOs), according to Bitcoinist.com.

 

Last year, Lithuanian crypto-financiers raised around half a billion euros from ICOs and blockchain-based businesses. The influx of cryptocurrency is one factor in the country’s healthy economic growth, Politico writes: GDP growth is expected to reach 3.1 percent this year, well over the EU average of 2.3 percent.

 

Not only is the regulatory burden low, but Lithuania has upgraded its internet network to support data-heavy operations, making it attractive to currency miners.

 

Crypto’s low-regulatory environment is also raising concerns international criminals could use it to funnel ill-gotten gains into Lithuania, which like neighbor Latvia could be vulnerable to penetration by Russian entities.

 

“[We don’t want] Russian capital infiltrating into the local economy,” Bank of Lithuania board member Marius Jurgilas said. “We are constantly reminding everyone about the risks.”

 

Earlier this month, Lithuania issued ICO guidelines to put the trade on a firmer regulatory footing.

 

Although the guidelines specify certain regulatory and tax obligations for ICOs and cryptocurrencies, they are more open compared to the position of other jurisdictions, News BTC says.

 

 

  • Lithuania ranked sixth globally for the total number of ICOs begun in 2017, legal and technology expert Wulf Kaal calculates. However, the amount of funds raised by ICOs lagged well behind the crypto market leaders such as the United States, Switzerland, and UK.

 

  • Gibraltar, Poland, Romania, and Liechtenstein are other territories where cryptocurrency is taking off thanks to liberal banking regulations, Forbes writes.

 

  • A money laundering scandal in Latvia  earlier this year exposed serious failings in one of its major banks. Embarrassingly for EU regulators, the alleged wrongdoing was uncovered not by them but by U.S. authorities, Reuters reported.

Compiled by Melissa Castano

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