Bank Of Lithuania And STO

Bank of Lithuania Issues Guidelines on Security Token Offerings

Recognizing that businesses are seeking alternative ways to raise capital other than bank lending, the Bank of Lithuania has issued new guidelines on security token offerings. The goal is to clarify applicable rules without introducing more regulations.

Guidelines Aiming to Avoid More Regulations

The central bank of the small Baltic nation of Lithuania has recently noted that the focus in the crypto space is shifting from initial coin offerings (ICOs) to security token offerings (STOs). Explaining the differences between the two, the Bank of Lithuania issued recommendations on capital raising through STOs.

Lietuvos Bankas is among the first financial regulators to issue guidelines on STOs. In an announcement published on its website, the bank emphasized that the new guidelines provide greater regulatory clarity while aiming at higher investor protection. Times have changed and as Bank of Lithuania Board Member Marius Jurgilas put it:

The guidelines provide the bank’s position regarding STOs rather than create new regulatory arrangements, Jurgilas pointed out. “In a strict regulatory environment, such as the securities market, it becomes crucial to set rules in order to avoid any miscommunication, misunderstandings and their consequences,” he said.

Adopting a regulatory approach that treats tokens as a financial instrument, the Bank of Lithuania has concentrated on classifying tokens, some of which have features of securities or other financial instruments. It also plans to assess specific cases separately, provide recommendations related to the issue of security tokens, and clarify applicable legal regulations.

Companies Alerted About the Rules to Comply With

Lithuania is one of the three Baltic nations that have adopted a generally positive approach to the industry dealing with cryptocurrencies. Earlier this year, the country’s central bank updated its position on decentralized digital currencies and tokens issued in coin offerings, opening the way for crypto payments in the country.

At the same time, the government in Vilnius is preparing to transpose the latest EU Anti-Money Laundering Directive into national law. In its recent press release, Lietuvos Bankas stressed that companies planning to use the STO method to issue tokens categorized as transferable securities or other financial instruments will have to comply with applicable EU and Lithuanian legislation regulating capital raising activities.