Lithuania are spearheading a movement which could see some major non-EU Fintech companies establish operations within the EU, that can allow them to take advantages of less harsh regulatory systems, according to a report by FinExtra.com
The plan, established in Lithuania has now received backing from the countries central bank, the Bank of Lithuania.
How will this work?
The idea, is to allow for access to Lithuania’s innovative regulatory system, for ‘Virtual Limited Liability Companies’. This, will allow virtual companies to exist on the blockchain, registered within Lithuania and thus, a part of EU moderating trading regulations.
According to FinExtra.com:
“The ability to remotely establish and manage a company in the EU is on the wish-list of many fintech companies. Analysts from Invest Lithuania, a foreign direct investment and business development agency, believe companies from Singapore, the US, Israel and other non-EU locations would all be interested in such a service.”
As we understand this, it will allow external companies operations to become verified within a blockchain, hosted within Lithuania, which by default will come under their, less stringent regulations as opposed to tighter regulations, like you might find in the USA for example. Here, the blockchain is essentially compressing time and space, giving companies a virtual office within Lithuania, which they can work at from an external physical office in their home country.
This means, payments will be made within the EU, transactions will be drawn within the EU and all registrations and contracts etc will be stored within the EU, in theory at least.
By registering a Virtual Limited Liaiblity Company, the Bank of Lithuania believe Fintech companies will be given a new lease of life which initially would only be accessible to companies trading within the EU. This element of blockchain technology, literally breaks down borders and allows for more transparent international operations. According to FinExtra.com, Mantas Katinas, the Managing Director of Invest Lithuania has said:
“As of now, the country already offers fintech companies the ability to receive a payments institution (PI) or e-money institution (EMI) license in just three months, which is 2-3 faster than in other EU countries. These draft proposals on the possibility of establishing a virtual company which can be managed remotely is another step in the right direction.”
This is another exciting application for blockchain technology that actually develops a lot of other possibilities and connotations too. This could open up fair trading to a number of non-EU companies and in turn, their citizens. In the grand scheme of things this could also have an impact on other trade relations within the EU and even stretch as far as Brexit negotiations, if the technology proves itself worthwhile.
Read the full article by FInExtra.com for yourself, here- https://www.finextra.com/newsarticle/31958/lithuania-to-establish-blockchain-based-share-register-for-non-eu-companies/startups