Why is Lithuania popular for EMIs?

[TimeAttack]

It just occurred to me that while combing through many online wallet services and debit card providers, many of them are using a Lithuania EMI as their partner.

What makes Lithuania in particular a good place for EMIs to incorporate in, as opposed to other EU countries?

 

[ilke]

It used to be very fintech-friendly. Now Lietuvos bankas (Central Bank of Lithuania, also the regulator) is scared and it is mostly unsuitable. New EMIs benefit from some places like the Netherlands or Cyprus nowadays.

The main benefit of Lithuania was (and is) easier access to the CENTROlink program, which is a SEPA and SEPA instant clearing system for SPIs/PIs/SEMIs/EMIs to use rather than having to pay a SEPA clearing house bank. This is much cheaper and you can process SEPAs truly for cents. Lietuvos bankas could also offer something equivalent to a safeguarding account. Institutions from other EU countries can connect it to it as well, though.

In the past, the regulation was also weaker. Now a Lithuanian EMI will not often open accounts unless the business is determined as low risk or they can 'extort' enough in fees to cover the immense compliance requested by the regulator. Unfortunately, such a case happens very often in politics, i.e. an approach starts off very lax, then they realise that they let fraud slip through, and then they overregulate to the point that legitimate business finds it hard to continue.

But it is true to assume that LB have a better understanding of PIs/EMIs than regulators in other countries, primarily because they have received hundreds of applications and even until now license 70-90 EMIs there.

 

[Compliance Circle]

It just occurred to me that while combing through many online wallet services and debit card providers, many of them are using a Lithuania EMI as their partner.

What makes Lithuania in particular a good place for EMIs to incorporate in, as opposed to other EU countries?

@ilke reproduced the history of Lithuanian EMI's rise and fail in a very precise way

Just want to add a few details on this topic:

1. Lithuania started actively marketing itself to market participants as new European FinTech hub immediately after Brexit happened. However, while I appreciate Baltic countries trying to find new niches to develop their small economies (i.e. Estonian e-residency, Estonian "cryptolicense" regulation), this new EMI hub idea was doomed to fail in mid-term perspective (7 years later they are at where they are) because LB clearly lacked the necessary resources to oversee so many new market participants in a prudent way from the very start, and it lacks wealth, reputation and global market interconnection of London to stay immune to external pressing.

2. CENTROLink was (and is) probably the biggest real advantage of Lithuania.

3. Most newcomers that target EU-wide or international markets indeed nowadays seek Netherlands or Cypriot licenses, bigger ones try to get those in Belgium and Luxembourg. Others spread around smaller hubs such as Czech Republic, Bulgaria in which regulators know AT LEAST SOMETHING about how EMI's work and operate in general.

 

[Martin Everson]

2. CENTROLink was (and is) probably the biggest real advantage of Lithuania.

You answered his question right there