The blockchain-based Virtual Limited Liability Companies (VLLCs) would allow foreign companies to remotely register and manage their businesses in the country, giving them access to the country’s innovation-friendly regulatory sandbox and the EU. A proposal is being drafted by the Lithuanian Centre of Registers regarding the necessary legal amendments to launch the VLLCs in 2019 and is endorsed by The Bank of Lithuania, the country’s central bank.
Lithuania would be the first country to launch VLLCs.
According to analysts from Invest Lithuania, organisations from the US, Israel, Singapore, and other countries outside the EU would be interested in the VLLC scheme. Many fintech companies desire to remotely setup and manage companies in the EU, making the move a potential boon for non-EU fintechs.
Other benefits include complete transparency in terms of share transactions due to the use of blockchain, and for Lithuania itself, a significant boost in establishing itself as a fintech leader.
The VLLCs would be legal, fully-recognised businesses and would be required to pay taxes and file financial statements in the country.
Mantas Katinas, managing director at Invest Lithuania, says the VLLCs could take on many forms, from being smaller enterprises owned by one person to larger corporates with shares that are publicly-traded.
Marius Jurgilas, who is a board member at The Bank of Lithuania, says that the bank is already working on a blockchain-based solutions accelerator geared towards fintech companies. He adds that the “[i]nitiative to create virtual companies on blockchain is a move towards even more ambitious goal—creating LTChain, i.e. moving relevant public services on blockchain.”
Lithuania has been making strides in becoming a fintech-friendly destination and hotspot. In 2017, 35 new companies were registered in the country, out of a total of 117. The country has also been advertising itself as a place to settle for British start-ups that want to prevent the potential negative effects of Brexit and for companies that want an entry point into the EU marketplace. Lithuania has made the transition for companies significantly easier. Registration only takes three days, with electronic money institution and payment institution licence acquisition taking three months, significantly faster than in other places in the EU.
Notable fintechs with offices in Lithuania include Revolut, InstaRem, and TransferGo.
By Elliot Lyons, Research Analyst