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According to an article published by POLITICO's reporter Joanna Plucinska, the Baltic state has taken an open-arms regulatory stance on digital currencies and blockchain technology. Despite the volatile nature of digital currency values, the global market is worth $275 billion, and Lithuania is excelling in issuing new digital currencies, or “Initial Coin Offerings” (ICOs) - over the past year, they have raised half a billion euros from ICOs and blockchain-based businesses. The European Commission has said the influx of real cash for digital units is helping to fuel Lithuania’s economy, which is expected to grow by 3.1 percent this year - ahead of a 2.3 percent average for the rest of the EU. But European central bankers and regulators have warned that cryptocurrencies can be a tool for criminals, helping them launder money by turning ill-gotten gains into untraceable digital credits and with no legislative platform in place, the risk for investors is growing.

Lithuania has been upgrading its internet networks to support data-heavy operations but Bank of England Governor Mark Carney called for a crackdown on cryptocurrencies, claiming it could be used for illegal activity and could disrupt the traditional financial system. The concern in Lithuania is that the burgeoning cryptocurrency market could be a driving force to illegal money coming from the Russian criminal underworld. Bank of Lithuania board member Marius Jurgilas told Politico reporter Joanna Plucinska: “We don’t want Russian capital infiltrating into the local economy. “We are constantly reminding everyone about the risks - ‘I don’t want to see 70 percent of your investors in your ICO coming from Russia’.

Cryptocurrency popularity is rising in Lithuania, but Europe's central banks have grown worried

“An influx of non-transparent capital from Russia is not in line with our national interests.” Without rules regulating cryptocurrencies in Lithuania, entrepreneurs raising money have far less accountability to their investors than they would in a more traditional initial public offering on the stock market. Despite the fears, startup incubators are beginning to flood the Lithuanian capital of Vilnius in particular, fuelled by new investment from banks and venture capital firms. According to Startup Lithuania and the Blockchain Centre in Vilnius, in the past year, new businesses ihave raised half a billion euros alone.

Mark Carney has called for a crackdown on cryptocurrencies