Poland vs Lithuania: Which is the Best for Your VASP License?

Introduction

With crypto becoming more mainstream, its adoption in the European Union is underway. The EU provides a decent environment for crypto businesses, especially with the MiCA regulation fully coming into effect at the end of 2024. Nonetheless, crypto businesses that want to operate within the EU, need to have Virtual Asset Service Provider (VASP) license. Choosing the right jurisdiction for the license is important as each country has different costs, speed of approval, compliance rules, and scalability opportunities. 

Two of the most popular destinations for VASP licensing are Poland and Lithuania. Each offers distinct advantages but also challenges. In a nutshell, Poland appeals to startups with its quick, cost-effective licensing process, whereas Lithuania is favored by businesses seeking long-term stability given that it is slightly more MiCA compliant than Poland.

In this blog, we explore the key differences between these two jurisdictions to help you determine the best fit for your crypto-based business.

Poland v. Lithuania Table

Poland: Overview

Poland has become a favored destination for businesses seeking Virtual Asset Service Provider (VASP) licenses due to its efficient registration process, competitive costs, and growing local crypto market.

There are many reasons why is an attractive destination for businesses. These are the main ones:

• Quick Licensing Process: Registration typically takes only 8–14 days, making Poland an ideal choice for businesses needing a fast market entry.
• Low Entry Costs: With share capital requirements starting as low as €1,100–€5,000 (PLN), Poland is cost-effective compared to other EU jurisdictions.
• Ease of Setup for Foreigners: No local director or physical presence is required, though having local representation is recommended for smoother operations.
• EU Market Access: Once MiCA compliance is achieved, businesses operating in Poland will have seamless access to the entire EU market.
• Supportive Market Environment: Poland boasts a growing economy with a significant crypto user base (6.3% ownership, 2.5M users) and strong crypto adoption.

However, there are certain challenges when it comes to obtaining a VASP license in Poland. First and foremost, Poland is not compliant with MiCA regulations and requires businesses to undertake additional steps to align with MiCA by 2025. Nonetheless, Poland will likely undergo the “grandfathering” transition period as other EU member states, which allows VASPs to fully transition under MiCA regulations in 12 months. Other challenges include bank account opening, which some companies found moderately challenging, especially for crypto-related entities. Last but not least, businesses may need to revisit compliance processes as Poland transitions fully to MiCA standards. Polish regulators also ask for AML compliance prior to MiCA, which can be an additional cost for businesses.

Essentially, Poland is ideal for startups who want to enter the EU crypto market due to its affordable costs, minimal regulatory barriers, and quick licensing process.

Lithuania: Overview

Lithuania has made a name of itself as one of the leading destinations for VASPs, although some companies have had their licenses revoked in 2024. Nonetheless, it is still a well-established fintech ecosystem that is semi-compliant with MiCA. Here are the key reasons why some people prefer Lithuania:

• Semi-MiCA Alignment: Lithuania is making significant progress toward MiCA compliance, with transitional steps required to fully align by 2025.
• Crypto-Friendly Banking System: Lithuanian banks are known for being more accommodating to crypto-related businesses, ensuring smoother financial operations.
• Access to the EU Market: A VASP license from Lithuania grants seamless entry to all EU and EEA markets, enabling businesses to scale their operations effortlessly.
• Competitive Tax Environment: Lithuania’s corporate tax rate of 15% is favorable for businesses seeking cost-efficient operations.
• Growing Fintech Hub: Lithuania has developed a robust fintech ecosystem, providing businesses access to valuable networks, blockchain expertise, and innovation-focused resources.

Despite these advantages, there are huge obstacles concerning VASPs in Lithuania. First and foremost, Lithuania mandates a minimum share capital of €125,000, which can be prohibitive for startups and smaller enterprises. Additionally, unlike Poland, companies must appoint a local AML officer and have at least one senior manager as a permanent resident of Lithuania. Additionally, VASPs must adhere to strict AML/CFT requirements and maintain ongoing compliance, including regular reporting to authorities. It is also worth noting that Lithuania will not undergo the grandfathering rule for MiCA. MiCA will be enforceable across the EU starting from December 2024, with a mandatory compliance deadline of June 30, 2025. Lithuania does not offer a “grandfathering period,” meaning that businesses obtaining a VASP license now must transition fully to MiCA compliance before this deadline.

To sum it up, Lithuania is ideal for long-term compliance. Lithuania’s proactive regulatory environment and growing fintech ecosystem make it a strong foundation for businesses prioritizing long-term scalability and MiCA readiness. While not fully MiCA-compliant yet, Lithuania provides the infrastructure to build operations that align with EU-wide standards before the 2025 deadline.

Scenario-Based Recommendations

Scenario 1: Urgent Licensing Need

Situation: A crypto exchange wants to legally operate within a month.

• Recommendation: Choose Poland for its quicker registration process and immediate entry to the EU market.
• Why: Poland offers a fast licensing process, with VASP registration completed in just 8–14 days, compared to Lithuania’s 2–3 weeks.

Scenario 2: Banking Challenges

Situation: A fintech startup struggles to open a bank account in Poland.

• Recommendation: Consider Lithuania for smoother banking integration.
• Why: Lithuanian banks are generally more crypto-friendly and offer better support for VASPs.

Scenario 3: Budget-Conscious Companies

Situation: A crypto startup with limited initial capital wants to enter the EU market legally.

• Recommendation: Start in Poland for lower upfront costs and adjust for MiCA compliance later.
• Why: Poland’s minimum share capital requirement (~€1,100) and initial licensing costs are far lower than Lithuania’s €125,000 requirement.

Scenario 4: Scaling with Tax Efficiency

Situation: A crypto company aims to minimizing tax obligations.

• Recommendation: Opt for Lithuania for its competitive corporate tax structure.
• Why: Lithuania offers a 15% corporate tax rate, lower than many other EU countries, making it a cost-effective option for scalable operations.

Scenario 5: Preference for Minimal Maintenance

Situation: A business seeks a low-maintenance compliance environment.

• Recommendation: Choose Poland for its minimal reporting requirements.
• Why: Poland has fewer ongoing regulatory obligations, making it cost-effective and time-efficient for startups and smaller enterprises.

Scenario 6: Sustainable Compliance Strategy

Situation: A crypto company seeks to future-proof operations under MiCA regulations.

• Recommendation: Choose Lithuania for its strong regulatory foundation and readiness for MiCA alignment.
• Why: While Lithuania is not fully MiCA-compliant yet, it has several principles of MiCA already implemented.

In a nutshell:

Go with Poland if you need fast, affordable licensing to start operations immediately.

Go with Lithuania if your priority is more sustainable compliance under MiCA, coupled with crypto-friendly banking and scalability.

Conclusion

Choosing between Poland and Lithuania for your VASP license depends on the priorities, timeline, and strategic goals of your business. 

Poland offers a fast, cost-effective solution for startups and smaller enterprises seeking quick entry into the EU market. Its easy process and minimal capital requirements make it ideal for businesses prioritizing speed and affordability. However, businesses must account for potential adjustments needed to align with MiCA by 2025.

Lithuania, on the other hand, provides a more sustainable framework that aligns in many ways with MiCA. Still, the initial investment and licensing process are more demanding. Nonetheless, Lithuania is known for its crypto-friendly banking and established fintech ecosystem, which make it an attractive choice for companies focused on stability and regulatory clarity. 

In the end, both countries provide unique advantages. It is up to you and your business goals to reach a decision. 

FAQ

What is a VASP license?

A Virtual Asset Service Provider (VASP) license authorizes businesses to offer services like crypto exchanges and wallets.

How do I obtain a VASP license in Poland?

Register a company, submit an application to the Polish Financial Supervision Authority, and meet AML/KYC requirements.

What are the capital requirements for a VASP license in Lithuania?

Lithuania requires a minimum share capital of €125,000 for VASP licensing.

How long does it take to get a VASP license in Poland?

The licensing process in Poland typically takes 8–14 days.

Is Lithuania MiCA-compliant for VASP licensing?

Yes, Lithuania is fully aligned with MiCA regulations, ensuring future-proof compliance.

Do I need a local director to obtain a VASP license in Poland?

No, Poland does not require a local director, but having one is recommended.

Which country offers faster VASP licensing: Poland or Lithuania?

Poland offers faster licensing, with a process of 8–14 days compared to Lithuania’s 2–3 weeks.

Are there banking challenges for VASPs in Poland?

Yes, VASPs in Poland may face difficulties establishing banking relationships.

What are the tax rates for VASPs in Lithuania?

Lithuania has a corporate tax rate of 15%.

Can foreign companies apply for a VASP license in Poland?

Yes, foreign companies can apply, and Poland does not require local directors or physical presence.