Lithuania’s fintech market is expanding, while inflation and implementing a sanctions regime create obstacles for businesses and the general public, according to Adon Legal Managing Partner Donatas Sliora.
“Given the geopolitical context and measures implemented in Lithuania and on the EU level, the major topic in the country is adhering to the sanctions regime,” Sliora explains. “This is especially crucial to financial institutions, as there is a need to ensure that the new regime is being implemented, together with the additional limitations from the national regulator.” For example, he explains, “financial institutions have certain additional limitations on transferring money to Russian and Belarusian residents. In that context, one of the biggest obstacles for financial institutions includes reviewing existing client databases and applying new standards and rules to them.”
“Lithuania remains the hot spot for fintech companies,” Sliora notes. “We still have a significant concentration of companies operating in the payments market, an increasing number of specialized banks, and other regulated financial services providers.” In addition, he says “it is likely that Lithuania will also become the hub for crowdfunding service providers seeking to register under the new EU crowdfunding services providers regulation, thus, the finance sector is still expected to grow rather rapidly.”
Sliora explains that increased interest in Lithuania’s market is potentially also related to new regulations being implemented in neighboring countries. For example, he says, “after some other EU member states have increased the pressure on virtual asset service providers, Lithuania became popular amongst such businesses. We have a significant number of new cryptocurrency exchanges that are registered.” According to him, Lithuanian legislators might also establish new requirements for virtual asset service providers, however, “it is not expected to affect Lithuania’s popularity and deter the country’s potential in that regard.”
One of the major challenges faced by the country is a high rate of inflation, according to Sliora. “The inflation rate in Lithuania remains significantly higher than the EU average,” he says, noting that “inflation in March in Lithuania was 15.6% compared to 7.4% in Germany. This leads to Lithuanian businesses and natural persons searching for ways to avoid the depreciation of cash and look for new investment opportunities.” According to him, high inflation may also have an effect on businesses’ ability to perform long-term contracts.
Overall, Sliora points out that the market remains active, with a high number of M&A deals, especially in the IT sector, and that the real estate market is still active. “Individuals still believe that investing in real estate is a safe option for investment” he concludes.
