Lithuania: Central Bank Policy Update Opens Crypto Investment Funds to Professional Investors

The Central Bank of Lithuania has recently updated its policies on cryptocurrencies and initial coin offerings (ICOs), effectively allowing cryptocurrency-based investment funds to operate in the country.

According to Finance Magnates, the central bank has reportedly attempted to give financial market participants (FMPs) a “level playing field” when looking into the nascent industry. The Bank of Lithuania has now established that FMPs can launch investment funds for “virtual assets,” and has created parameters for how and when these assets can be used as a payment method.

The documents read:

Taking into account current market developments and evolving regulatory regimes as well as seeking to ensure a level playing field for all financial market participants, the Board of the Bank of Lithuania has updated its position on virtual assets and initial coin offering[s].

The central bank’s new policy means professional investors can create funds for digital assets, and that private companies can receive cryptocurrency payments processed by third-party exchanges, that turn them into local fiat currency.

It notes, however, that FMPs can’t accept digital assets if they’re then required to repay them, with or without interest. They’re also prohibited from issuing cryptocurrency-based loans, or from accepting virtual assets as collateral, unless they’re legally seen as securities.

Per the central bank, FMP should still attempt to separate their traditional financial activities from those related to virtual assets. They should, in fact, not provide services related to the cryptocurrency industry.

Crypto Growing in Lithuania

In Lithuania, the cryptocurrency scene has notably been growing. Recently, cryptocurrency wallet provider Blockchain.com opened offices in the country, and the amount raised by ICOs based in the country has kept on growing.

According to the report, it may have been behind Lithuania’s recent move, as the country saw a need for tougher anti-fraud measures with the growing popularity of the fundraising practice. As CryptoGlobe covered, in April of last year the central bank initiated a dialogue between crypto investors, banks, and regulators.

Chainalysis Launches Real-Time Suspicious Transaction Alerts for 15 Cryptocurrencies

Blockchain intelligence firm Chainalysis has introduced "suspicious cryptocurrency transaction alerts" in "Chainalysis Know Your Transaction (KYT)", its "real-time anti-money laundering (AML) compliance solution".

Chainalysis, which was founded in 2014 by Dr. Michael Gronager (the current Chief Executive Officer), Jan Moller (the current Chief Technology Officer), Jonathan Levin (the current Chief Operating Officer), is a company with two main products:

  • Chainalysis Reactor -- its investigation software suite
  • Chainalysis Kknow Your Transaction (KYT) -- its compliance software suite

Chainalysis KYT supports "real-time transaction screening"; "case management capabilities"; "enhanced due diligence"; and "KYT for token issuers".

In a press release published on its blog on Thursday (August 22), Chainalysis says that Chainalysis KYT's alerts are "designed to help cryptocurrency businesses and financial institutions mitigate exposure to regulatory and reputational risk by helping compliance teams focus on the most urgent activity and enforce compliance policies while better allocating resources."

John Dempsey, VP Product, Chainalysis, had this to say:

As lawmakers and regulators focus their attention on the industry, it is more critical than ever that cryptocurrency businesses demonstrate compliance best practices.

According to Chainalysis, this new feature results in alerts being generated "whenever a transfer involves a risky counterparty and crosses a value threshold." Alert levels (Severe, High, Medium, and Low) are "based on factors such as category, service, direct versus indirect exposure, direction of funds, and amount," and are available for all 15 cryptocurrencies that Chainalysis supports (including BTC, ETH, BCH, LTC, USDT, and DAI).

Michael Breu, Gemini's Chief Compliance Officer, also chose to comment on this announcement:

As a New York Trust company we are required to monitor transactions on and off our platform. Tools like KYT alerts, which provide real time and ongoing blockchain analysis, coupled with Gemini's own compliance policies, help us meet our regulatory obligations.

 

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