Last month, the Bank of Lithuania became one of the first regulators globally and first ones in EU to issue guidelines on Security Token Offering (STO). The guidelines define which tokens are to be categorized as having features of securities or other financial instruments, clarify legal regulation and offer recommendations on issuing security tokens.
The possibility to raise capital in this innovative way is already drawing significant attention, as the Bank of Lithuania informed it had to deal with dozens of inquiries only days after the guidelines were released.
“With the new STO guidelines, the Bank of Lithuania again showcased itself as a pro-active regulator who understands the importance of market certainty, consumer and investor rights, and financial literacy,” commented Anton Zujev, Head of Business Development at Fininbox, a Lithuania-based Banking Software as a Service (SaaS) provider for electronic money and other financial institutions.
In the past few years, the Bank of Lithuania established itself as an innovative regulator, with their policies leading to Lithuania becoming an unlikely front-runner in the European fintech sector. In terms of the number of EU Electronic Money Institution (EMI) licences issued, Lithuania is ranked second in the European Union, trailing only to the United Kingdom.
The new guidelines will further facilitate the appeal of the Lithuanian fintech scene and is welcomed by the local fintech community and possible investors. “The general public investors will benefit the most from the guidelines,” said Mr Zujev. “When ICOs and STOs were unregulated, the regulator could not protect the general public. These guidelines will lead to better-informed decisions and a certain standard of service when investing in STOs. Fintechs and businesses will also benefit, as the removal of uncertainties will let STO-related fintechs to focus on their service offering.”
The fintechs active in Lithuania are also benefiting from several other advantages. For example, CENTROlink, the Bank of Lithuania’s SEPA payments clearing system, offers the cheapest SEPA payments in the Eurozone, while Vilnius, the Lithuanian capital, offers many cost competitive advantages when compared to other fintech hubs in Europe.
“What stands out the most is the approachability of the Bank of Lithuanian and their innovative approach to licensing and regtech, while being effective at market oversight,” concluded Mr Zujev. “The thing that the Lithuanian fintech scene lacks is a local fintech startup with a unicorn status. Such achievement would further consolidate Lithuania’s position as the best destination to launch a fintech project or seek employment within the industry.”