Why FinTech companies choose Lithuania for financial licensing?

Republic of Lithuania offers the most advantageous conditions for entering financial & payment markets in Europe. Especially, two types of licenses, i.e. Payment Institution and Electronic Money Institution, offer wide range of possibilities for new businesses. Bank of Lithuania, which is the financial regulator, shows tremendous activeness in attracting new business to the country. In all largest FinTech conferences and exhibitions in Europe and Asia you can always find a representative of the Bank of Lithuania that invites new and existing payment business to do their activities through a Lithuanian license. Simply, Lithuania for last two years issued more than 30 new E-Money licenses, while some other countries of Europe did not reach such results for decades.

Bank of Lithuania made two other huge steps towards raising FinTech industry, which makes it different from other countries:

Firstly, any Payment or E-Money Institution without any commercial bank can obtain a bank/sort code from Bank of Lithuania and join SEPA system directly. That allows the financial company not only generate its own EUR IBANs, but also to exchange with incoming and outgoing transactions without any commercial bank behind. As example, Revolut, being the market leader in Europe, is also connected to Bank of Lithuania through CENTROlink. In fact, Revolut had just obtained a specialized banking license from the Bank of Lithuania and is authorised to accept deposits and offer consumer credits.

Participation in SEPA without any commercial bank makes all EUR transactions much dramatically cheaper. It also eliminates any intermediary and 3rd party compliance, which can block transactions for any reasons. Being connected to CENTROlink the financial company may exchange with EUR payments and stay completely independent form any commercial banks. FinTech in other countries cannot afford that.

Secondly, in comparison with all other countries of EU, Bank of Lithuania allows to keep funds not only in credit institutions of Europe, but also directly in Bank of Lithuania itself. As you know, commercial banks are losing business from the rising FinTech industry and blocking, especially new companies, for opening of accounts. By law, client’ funds can be kept only in banks, thus, even a licensed company faces a problem to start its operations. They simply do not have a bank account, but not in Lithuania. With Lithuanian Payment Institution or Electronic Money Institution license you can keep client' funds directly in the Bank of Lithuania. 

In other words both for serration of client’ funds and for euro transactions you financial company will be completely independent from commercial banks.

If you are interested in obtaining a financial license from the Bank of Lithuania, please contact our lawyers at Gencs Valters Law Firm at info@gencs.eu. or by visiting our website at www.gencs.eu. This article is brought about in cooperation with FinTechLab Group (www.thefintechlab.com).

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In many regards, Latvian advocate Valters Gencs is the archetypal modern Baltic attorney – US educated, willing to take a commercial risk with his firm, which has been successfully operating for almost 16 years.  

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