Despite Russian Trade Ties, Lithuania Looks to Europe for Bitcoin Regulation Lead

Pete Rizzo
Feb 10, 2014 at 21:13 UTC
NEWS

Following a string of similar announcements from Estonia and Russia, the Central Bank of Lithuania issued a warning to its citizens regarding the use of bitcoin and other virtual currencies on 31st January.

Now, two weeks later it has clarified its intent, indicating that the possibility of new regulation remains "under discussion", but that it would likely monitor decisions from Europe before enacting any laws.

Speaking to CoinDesk, the Central Bank of Lithuania expanded upon earlier warnings that suggested the eastern European nation may issue "an official ban" on currencies not recognized by the state – an action recently taken by one of its largest trading partners, Russia.

A spokesperson for the bank said:

"The main message was that bitcoins are not regulated or supervised by the Lithuanian and European authorities. Users and investors should know that they are not protected and their losses will not be compensated."

Russia ranks third in overall trade with Lithuania behind the European Union and the Commonwealth of Independent States, of which Russia is a member.

Following Europe's lead

We are looking forward for decision of European authorities on the treatment of virtual currencies.

Perhaps most notable for the countries bitcoin users is that the Bank of Lithuania suggest that, while it is monitoring other nations, Russia and China were not cited among those that would have a measurable impact on any eventual decisions.

The bank said: "We are looking forward for decision of European authorities on the treatment of virtual currencies such as bitcoin."

For now, however, the bank stated that "there is no common decision" about how bitcoin and other virtual currencies should be regulated.

Still, it acknowledged that with no current laws relating to virtual currencies, there maybe a "need" for it to give its market legal clarity. A spokesperson for the bank suggested that it has been monitoring bitcoin and other virtual currencies "for some time", and that three central concerns regarding bitcoin have emerged:

  1. Lack of regulation
  2. Lack of consumer protection
  3. Possible money laundering activities.

As for any benefits bitcoin could provide to Lithuania's financial ecosystem, the Bank of Lithuania was less straightforward. Rather, the spokesperson indicated that since there has been no official decision on bitcoin, "it is premature to talk about any benefits".

Bitcoin use in Lithuania

Currently, Lithuania ranks 46th in terms of total bitcoin users – behind South Africa, but ahead of Kazakhstan, which recently issued a similar warning. However, bitcoin has developed a presence in the country's business community.

For example, FOXBOX accepts bitcoin at its money service terminals, which are now available in more than 90 Lithuanian cities, making it one of the more extensive networks of physical bitcoin kiosks. Further, FOXBOX uses Lithuania-based wallet and exchange provider SpectroCoin to power its services.

Statistics show less than 1 percent of Lithuania's population are bitcoin users. To date, just over 15,000 Lithuanians have downloaded the official Bitcoin-Qt wallet, and despite comments from the bank, interest seems to have been steady, with 10% of all downloads coming since the start of 2014.

At press time, 1 BTC was trading for 1682 Lithuanian litas.

Vilnius, Lithuania image via Shutterstock 

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