As a country of the European Union, Lithuania is one of the jurisdictions where the latest crypto regulation, Markets in Crypto-Assets (or MiCA, for short), applies. One of the major changes brought about by this regulation is the new CASP status, which stands for Crypto-Asset Service Providers. It will substitute the well-known VASP and introduce new changes along with it. Here is more about the main differences between the two in Lithuania.
VASP vs. CASP in Lithuania: Navigating the Regulatory Landscape
In 2024, the VASP license in Lithuania was known as the most prestigious registration for blockchain ventures. The framework was enforced by the Central Bank of Lithania through the special Financial Crime Investigation Service (FCIS). Until 2024, the VASP framework in Lithuania was based on the amendments made to the Law on the Prevention of Money Laundering and Terrorist Financing (AML-CFT), which was enforced back in 1997. The regulations were strengthened by the additional AML/KYC measures introduced in 2022.
Under the VASP regime, in order to register a crypto business in Lithuania, several key measures were required. Every applicant should have formed a company in Lithuania, arranged the AML/LYC compliance framework, hired a resident AML Officer, and submitted an application for the Lithuania crypto license.
With the introduction of MiCA, this framework changed drastically, and the requirements for crypto companies and their owners became more stringent. Now, to navigate the local regulatory landscape for CASPs, the assistance of a lawyer is necessary for full and proper compliance. Luckily, there is still time to prepare for the CASP transition: Lithuania has implemented a grandfathering period until June 1, 2025.
Understanding the Permitted Activities Under VASP and CASP Licenses
Under the VASP regime in Lithuania, two distinctive types of licenses were offered to applicants:
- Cryptocurrency exchange operator license, which gave the right to open cryptocurrency exchange platforms;
- Cryptocurrency depository wallet operator license, which let companies manage customers’ crypto wallets.
MiCA has introduced a new classification system for crypto assets and, therefore, activities under the Lithuanian license. Now, the companies that engage in activities with so-called Asset-Referenced Tokens (ARTs), regardless of the business structure and offered services, can apply for the CASP registration in Lithuania.
Capital and Compliance: Financial Obligations and Regulatory Demands for Lithuanian Crypto Businesses
Crypto businesses that applied for the VASP status in Lithuania were required to raise a share capital that equalled EUR 125,000, and a quarter of it should have been deposited into the company’s corporate bank account.
Under MiCA, the capital requirements have changed. The Class 1 license, which mainly covers execution of orders, transfer services, and portfolio management advice, requires a share capital of EUR 50,000. The Class 2 license applicants, operating crypto exchanges and providing custody and administration services, have to raise at least EUR 125,000.
Finally, the Class 3 applicants have a minimum capital requirement of EUR 150,000 if they want to provide all the services under the Class 2 license, plus operate a crypto trading platform.
Anti-Money Laundering (AML) and Know Your Customer (KYC) Procedures: A Comparative Analysis
In Lithuania, Virtual Asset Service Providers (VASPs) must comply with strict AML and KYC regulations under the Law on the Prevention of Money Laundering and Terrorist Financing. They must verify customer identities, monitor transactions for suspicious activity, maintain records, and report risks to the Financial Crime Investigation Service (FCIS). To ensure compliance, VASPs also need internal controls, risk assessments, and staff training.
Crypto Asset Service Providers (CASPs) follow similar AML and KYC rules but face extra scrutiny due to the evolving nature of crypto assets under MiCA. They must verify identities, track transactions, and maintain records, with heightened attention to DeFi, ICOs, and anonymous transactions. CASPs also navigate stricter oversight on asset custody, cross-border operations, and new EU regulations like MiCA, requiring constant regulatory adaptation.
Who Oversees VASPs and CASPs in Lithuania?
The main regulatory body that oversees existing VASPs in Lithuania is the Central Bank of Lithuania. Consequently, during the country’s transition to the CASP regime, the Central Bank was named the regulator and issuer of the MiCA-compliant licenses. Along with the Financial Crime Investigation Service (FCIS/FNTT), it controls the compliance of both new applicants and the successful transition of existing VASPs to the CASP status as required by MiCA.
Step-by-Step Guide and Required Documentation
The new list of demands to Lithuanian crypto companies is significantly bigger under MiCA. Before, the businesses were required to incorporate a UAB (Limited Liability Company) with a legal address in Lithuania, provide identification documents of all participants, raise an authorized share capital, draft a business plan, and hire a local AML Officer to control the AML-CFT compliance.
Now, the expanded list of requirements will likely contain the following steps (unless there are any changes introduced by the Lithuanian domestic regulation):
- Company formation with a legal address
- Approval of the management body (obligatory due diligence checks of each member)
- Raising a share capital according to the license class
- Documenting every system that comprises a company (human, financial, technical)
- Preparing a whitepaper in case of token issuance
- Drafting a program of operations
These are just a few of the requirements towards CASPs under MiCA. In order to navigate the regulation better and check all the boxes, we recommend consulting a MiCA lawyer.
Financial Implications for VASP and CASP License Holders
VASP and CASP license holders must meet financial requirements, including a minimum share capital (at least EUR 125,000 for VASPs and at least EUR 50,000 for CASPs) and ongoing compliance costs for AML/KYC measures. Regulatory audits, transaction monitoring, and reporting are some of the other operational expenses.
VASP or CASP – Which is Best for Your Business Model?
Choosing between a VASP or CASP license depends on the services you’re planning to provide: VASPs focus on virtual asset exchanges and wallets, while CASPs cover a broader range of crypto-related activities. If your business involves DeFi, ICOs, or custody services, a CASP license may be more suitable due to its regulatory scope. However, you must remember that by the time the grandfathering period is over, all VASPs in Lithuania will have to either transition to CASP or revoke their licenses, as the VASP status will no longer be valid.
