Lithuania’s Ministry of Finance is the latest financial regulator to issue guidance on initial coin offerings (ICOs).

The ministry said that due to the different ICO models and different characteristics of tokens, ICOs may be subject to the requirements of the existing legislations in the country. The guidelines are aimed at bringing more transparency in the regulatory, taxation, accounting, and anti-money laundering and counter financing of terrorism (AML/CFT) requirements.

“We are one of the first ones in Europe who prepared comprehensive Guidelines on legal framework for ICO projects covering regulatory as well as taxation and accounting,” Minister of Finance Vilius Šapoka said in a statement.

In particular, the ICO guidance focuses on ICOs that “Grants profits or governance rights” to investors. It further classifies ICOs into areas such as whether they have the characteristics of security or financial instruments, whether they fall under the scope of crowdfunding laws, the entities organizing the ICO, etc.

“Bank of Lithuania acts as a regulatory authority of financial markets in the Republic of Lithuania. Only the entities that are planning to provide regulated financial services and (or) projects which released tokens that have characteristics of securities will be under its scrutiny,” the document reads.

Here are some of the key takeaways:

• Income received from individual purchases and sales of virtual currencies will be taxed standard 15% fixed income tax rate.
• When tokens treated as securities are supplied for payment through ICO, such tokens are treated as issue of shares which is not subject to VAT.

The ministry said that the guidelines, however, cannot be regarded as an official interpretation of the legislation.