Lithuania recently experienced a boom in their cryptocurrency that is supported by a liberal approach towards regulations that the nation’s government took.
However, this same liberal marketplace is also stoking fears of money laundering from the Russian criminal underground.
Pushing Back Against Money Laundering
In a recent article from Politico, Marius Jurgilas of the Bank of Lithuania discussed concerns that the country has with money entering its economy from Russia.
Jurgilas says that an influx of shady capital of Russian origin is not in line with their country’s interests. He says they have already repeated calls for investments that are not predominantly Russian.
Profit from criminal enterprises is often hard to channel into banks and other formal financial institutions. The implementation of strict Anti Money Laundering regulations is the cause of this. Many critics of cryptocurrencies point out that the deregulated nature of crypto makes it an ideal route for money laundering.
Entrepreneurs Drawn To Lithuania’s ICO Reputation
The Lithuanian government is concerned that money from Russia’s underground could be funneled into the country by way of extensive investments in projects related to digital currencies, specifically through ICOs.
Lithuania is one of Europe’s centers for Cryptocurrency and ICO activity. Statistics show that cryptocurrency projects in the country attract around ten percent of all global ICO investments. The report also says that cryptocurrency entrepreneurs in the country raised almost half a billion euros from ICOs and blockchain-based businesses.
Regulations Proposed To Handle The Issue
This June, the Baltic state’s finance ministry revealed a paper outlining the country’s new take on security laws. The framework provided guidelines for ICOs and placed Lithuania in the lead, compared to its EU peers when it comes to regulations.
The reveal follows an initiative from the Lithuanian central bank earlier this year to engage with commercial banks and digital currency traders and to understand their position on cryptocurrencies.
With a statement of support from the Vice-Minister of Economy, Lithuania is pulling out all the stops to position itself as a force for progress in the cryptocurrency sphere.
Lithuania’s approach toward cryptocurrencies shows how the monitoring of crypto’s relationship with traditional modes of finance can help assuage regulator’s fears while still supporting an ecosystem conducive towards innovation in the crypto sphere.