Kelly Robertson
Lithuania’s Central Bank has recently announced a new regulatory “sandbox” for startups working with blockchain. Under the initiative called “LBChain,” the Bank of Lithuania will set up a dedicated platform around the technology through which companies can develop decentralized services that would be subject to some gatekeeping by central bank officials.
“Blockchain technology has a tremendous adaptation potential for innovations conducive to consumers in both the financial and public sectors,” Marius Jurgilas, a member of the central bank’s board, said in a statement. “Giving room to regulated development of this technology would provide our country with particularly favorable opportunities for investment and attraction of talents as well as acceleration of advanced innovations.”
The problem, however, is that sandbox won’t open in 2018, with the Bank looking to launch it at some point next year. Support for the project will come, in part, from the European Union, though it is not clear just how much the EU will chip in.
ICO guidance
The move towards embracing blockchain startups comes months after the Bank of Lithuania released guidance for Initial Coin Offerings (ICOs) in the country.
In October 2017, the Bank issued a four-page position note with two sections: one which reiterated a 2014 statement that bans banks and financial institutions from handling or otherwise working with cryptocurrencies, and another that hones in on the issue of ICOs.
The “ICO part” of the note outlines a few of the existing laws that could apply to such endeavors, depending on the characteristics of the project and the function of the token itself.
“Notwithstanding the fact that such activities are not regulated, in their essence, they are the raising of funds from investors, often unprofessional, to finance some activity,” Marius Jurgilas, one of the central bank’s board members, said at the time. “Since the risk of losing investors’ funds and other risks are particularly high, our position is that such offering, in certain cases, should be subject to investment related legislative requirements and restrictions.”
The central bank added that Lithuania’s laws regarding securities, crowdfunding, collective investment schemes and financial services could impact the blockchain use case.
At the same time, the institution clarified that ICOs are not specifically regulated, and that both organizers and investors should bear in mind when moving ahead with any launch plans.
“It should be noted that, when deciding on the application and scope of specific legislation of the Republic of Lithuania for specific ICO, the conditions of the relevant ICO should be analyzed and assessed,” the document states.
The Bank of Lithuania is not the first such institution to issue what is effectively an ICO warning; similar statements from other central banks regarding the legal ramifications of such offerings have been released, as well.
