- The Lithuanian Ministry of Finance wants to ban non-custodial crypto wallets.
- The new regulations also impose stricter regulations on crypto service providers operating domestically.
- The announcement comes after the European Union’s recent decision to advance anti-anonymity rules in the crypto space.
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The Lithuanian Ministry of Finance has banned anonymous wallets and imposed strict regulations on crypto exchanges in an effort to combat money laundering, terrorist financing and sanctions evasion. The ministry said it had made steps in anticipation of future EU decisions.
Lithuania Bans Self-Hosted Wallets
The Lithuanian government is looking at ways to pass new laws to tighten crypto regulations and ban anonymous wallets.
According to the Ministry of Finance, the government Approved Wednesday’s amendments to the “Law on the Prevention of Money Laundering and Terrorist Financing,” which aim to increase transparency of the cryptocurrency sector while ensuring its “continued further development.” The amendments need to be approved by Seimas, Lithuania’s legislature, before it becomes law.
Among other things, the law seeks to prohibit 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 announce the names of crypto exchange operators.
These steps are justified by the Ministry of Finance as an effort to combat money laundering, terrorist financing, evasion of sanctions from Russia and Belarus, and reputational risks for market participants in Lithuania and the Lithuanian state.
Finance Minister Gintarė Skaistė also stated that the government is “taking proactive steps to strengthen regulation at the national level in preparation for further decisions at the national level. [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 much more difficult. The law has been criticized by many cryptocurrency advocates, including Coinbase CEO Brian Armstrong.
The number of crypto companies has increased rapidly in Lithuania following the tightening of restrictions in neighboring Estonia. Although there were only 8 crypto companies founded in 2020, the Ministry of Finance stated that more than 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.