Recognizing that businesses are seeking alternative ways to raise capital other than bank lending, the Bank of Lithuania has issued new guidelines on security token offerings. The goal is to clarify applicable rules without introducing more regulations.
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Guidelines Aiming to Avoid More Regulations
The central bank of the small Baltic nation of Lithuania has recently noted that the focus in the crypto space is shifting from initial coin offerings (ICOs) to security token offerings (STOs). Explaining the differences between the two, the Bank of Lithuania issued recommendations on capital raising through STOs.
Lietuvos Bankas is among the first financial regulators to issue guidelines on STOs. In an announcement published on its website, the bank emphasized that the new guidelines provide greater regulatory clarity while aiming at higher investor protection. Times have changed and as Bank of Lithuania Board Member Marius Jurgilas put it:
The current focus on security token offerings is taking over the waning interest in ICOs. Businesses are interested in this particular way of raising capital as an alternative to bank lending.
The guidelines provide the bank’s position regarding STOs rather than create new regulatory arrangements, Jurgilas pointed out. “In a strict regulatory environment, such as the securities market, it becomes crucial to set rules in order to avoid any miscommunication, misunderstandings and their consequences,” he said.
Adopting a regulatory approach that treats tokens as a financial instrument, the Bank of Lithuania has concentrated on classifying tokens, some of which have features of securities or other financial instruments. It also plans to assess specific cases separately, provide recommendations related to the issue of security
