Source: Coin Geek, originally published on .
Slowly but surely, more countries are beginning to introduce regulations that govern the cryptocurrency space. While the European Union has previously stated that it hopes to have some form of guidance ready by August, other countries around the world have begun implementing regulations, even if only on a limited scale. Lithuania is the latest example, publishing guidelines for initial coin offerings (ICO) and digital tokens as they relate to securities.
According to a document (in PDF) published by the Lithuanian Ministry of Finance (MOF) last Friday, the guidelines offer a public definition of the framework of tokens. In the guidelines, the MOF suggests that cryptocurrencies can be divided into classes based on whether or not they grant governance rights or profits to those who invest during an ICO. The MOF further recommends that existing civil codes apply to any project involving tokens, through which the token only serves as a payment tool or gives rights to access certain products. If the token provides any type of profit or governance rights, it would also fall within the scope of financial regulations.
The ICO is further broken down into several different areas defined by criteria such as whether tokens are issued, if the company behind the ICO participates in other market exchanges, if the ICO is part of a crowdfunding venture and the company behind the ICO. The MOF points out that all of these segments should fall under the auspices of existing laws, whether these are related to crowdfunding, securities or financial instrument markets.
The ministry indicates that the recommendations are not to be considered as law; however, it points out that the idea is to provide a greater level of transparency to the cryptocurrency industry to allow it to grow in a regulated environment. Lithuania’s Minister of Finance, Vilius Sapoka, said, “ICO market has not been regulated yet. It has huge potential but there are risks that we must manage. We should make our efforts for Lithuania to become the main headquarters for those ICO project promoters who are willing to operate in a transparent and orderly legal environment.”
Apart from the financial regulations, the framework also provides guidance designed for Lithuania’s taxation, financial crime investigation and auditing agencies view cryptocurrency. This Is part of an effort to provide recommendations on how the agencies should apply rules regarding taxes and anti-money laundering practices. The MOF pointed out that “income received from individual purchases and sales of virtual currencies will be taxed standard 15% fixed income tax rate.”