Not long ago, Lithuania and Estonia were magnets for crypto business: fast registration, accessible CASP licenses, moderate taxes, free movement of cryptocurrency. However, since the beginning of 2023, the situation has changed — and not for the better. Both countries have tightened requirements for crypto companies. This has put entrepreneurs before a choice: stay or change jurisdiction.

Why developing a crypto business in Lithuania or Estonia is no longer so beneficial
 

• In the case of Estonia, the whole issue is the tightening of requirements for VASP (Virtual-Asset Service Provider): the share capital was increased 10 times (if earlier it was 12,000 euros, now the capital requirements range from 100 to 250 thousand euros), mandatory team presence was introduced, and regulatory oversight from the Financial Intelligence Unit (FIU) was strengthened. All these circumstances cause significant complications for crypto business operations — doing business in Estonia is now more expensive, and there is more reporting and scrutiny of crypto operations.

I’ll share a story from Inexis’s practice: after MiCA (Markets in Crypto-Assets Regulation) came into force, a client contacted us for a consultation. The essence of the problem: “A letter came from the Regulator saying that the share capital needs to be urgently increased.” Reminder: by 10 times. Naturally, the client’s decision was relocation. And I completely understand it.

• In Lithuania, the situation is no better: there has been increased attention to AML/CTF compliance from the Lithuanian Central Bank. This concerns the consequences of auditing companies, which revealed that most did not comply with the requirement of having AML officers on staff (i.e., persons responsible for the procedure of preventing money laundering of illegally obtained funds). For business, this means one thing — an increase in the budget for hiring and paying another employee.

Moreover, Lithuania carried out an enhanced verification procedure — as a result, about 300 VASP company registrations were canceled. This forced entrepreneurs who do not plan to apply for MiCA now to relocate to other countries, particularly to Poland and the Czech Republic, where more lenient regulators operate and a grandfathering period is in place (that is, a period during which it is still possible to continue activities under the old rules).

Speaking on MiCA, I would like to mention another case of ours related to Lithuania: the client’s company was removed from the register of crypto asset providers because the company’s contact person was employed at several other companies. The client expected Lithuania to allow a longer preparation period for MiCA, but it turned out that the country had already tightened control even before the new regulatory regime for crypto providers came into force. The best solution in this situation for him was relocation.

So if earlier Lithuania and Estonia could boast strong demand for crypto business development, now companies are changing their approach. Business owners are looking for a more stable and predictable environment, with less pressure on business and more flexibility. And such options still exist in other markets. Let’s take a closer look at which ones and how to relocate your crypto assets.

Potential jurisdictions for relocation and their advantages:

• Poland: transparent and clear requirements, access to the Polish crypto services market, the most popular type of crypto business operation in Europe
  
• UAE (DMCC, ADGM): attractive conditions for crypto funds and exchanges, tax benefits, loyal regulator
  
• British Virgin Islands (BVI): confidentiality, no mandatory reporting for crypto, possibility to launch a token issuance
  
• Portugal: favorable attitude toward crypto assets, active Web3 infrastructure, possibility of residence permit through business
  
• Seychelles: flexible regulation, popular jurisdiction for launching exchanges and other blockchain projects.

How to relocate your crypto company to another country
 

There are several relocation options, such as mergers or acquisitions, redomiciliation (legal relocation of a company without its liquidation), or creating a holding company. But in practice, the main method of relocating a crypto company is establishing a new company in a new jurisdiction.
 

This is the most popular and simplest option — to open a new company, transfer crypto assets, domains, intellectual property to it, update client agreements, and close the old company in the previous country (in our case – Lithuania or Estonia).

Why this mechanism
 

It’s simple: in a situation where, for example, the regulator sends a letter about increasing the share capital, applying a merger or acquisition would mean you only increase your problem — the group of companies will have more complicated financial reporting and assessment by the regulator of all group companies, and the problem of increasing the share capital won’t disappear.
 

In the case of creating a new company, such problems will not arise: you just close the previous business and choose a jurisdiction where conditions are more convenient.

 But if you still decide to keep the Estonian/Lithuanian company as an agency or representative office, I advise you to remember to properly arrange the functional distribution within the group of companies, as well as to continue maintaining and submitting reports in that jurisdiction. The Estonian company has many advantages besides the crypto license, in particular unique taxation, a qualified workforce, and a digitalized environment.

You have already chosen a new country – what’s next? Step-by-step relocation plan
 

When you have chosen the jurisdiction and relocation mechanism, the most difficult part of the process begins — implementation. Let’s go through the main steps in transferring the company:

• Company audit

Before choosing a new jurisdiction, you need to clearly understand what is happening in your company. Check if you have AML specialists in your structure, and analyze the existing crypto licenses, the company or group structure, and financial indicators with a lawyer. Such an analysis will help you understand which jurisdictions suit you, predict regulatory requirements, choose a tax- and operation-friendly country, and find out whether new licenses will be needed.

• Company registration or purchase of a ready-made company in a new country

This step was covered in more detail in the previous section of the article. The registration procedure, of course, will depend on the jurisdiction you choose.

• Obtaining a license

This refers to the crypto license. Its type depends on the jurisdiction. For example, in Poland it’s the VASP (Virtual Asset Service Provider) license, in Dubai – a crypto license from VARA (Virtual Assets Regulatory Authority).
This step includes several stages, in particular preparing procedures and policies, including AML/CFT procedures, IT systems audit, and submitting an application to the new regulator. Each jurisdiction has its own rules, but it is standard in every country that the company must prove its ability to prevent money laundering risks, data leaks, and ensure user safety overall.

• Opening accounts in banks and/or payment institutions

It should be noted: not all banks support crypto. For example, banks in the UAE are very cautious towards crypto companies, and often clients from this jurisdiction could only open accounts in payment institutions. Polish banks are also biased against crypto companies, although European EMIs (Electronic Money Institutions) are more welcoming.

• Updating the website

This concerns specifying the new company address and information about its activities in the new jurisdiction on the website. Not indicating the changes means misleading the client.
And although it may seem insignificant at first, I hasten to warn you: the consequences of failing to fulfill this point can be quite unpleasant. I know of cases from practice where, due to lack of updated company data, the regulator held the director personally responsible. And additionally, of course, imposed a fine.

• Migration of the client base and KYC data

Client data is also an asset. And at the same time – a high-risk area during relocation. So we always emphasize to clients the importance of considering GDPR, local rules on storage and processing of personal data to avoid privacy violations.

What else

Changing jurisdiction is not just “re-registering in another country.” Make sure your team has taken into account the following:

• AML/CTF compliance in the new country
  New jurisdictions = new compliance standards. You need to adapt AML policies, onboarding flow, client and owner checks to the regulator’s requirements.
  
• Tax residency of the beneficiary
  Changing the business jurisdiction can affect the founder’s tax status. In some cases – lead to double reporting or additional tax accruals.
  

The year 2025 will pose a choice for many Fintech projects: stay in Lithuania/Estonia, or change to a more flexible country? The rules of the game for crypto business will change and become more complicated, but while more crypto-friendly options still exist — the search and relocation processes will continue.
The key in choosing a strategy is to consider your long-term personal and business goals abroad, study the consequences, consult a lawyer, and only then make changes.