Bitcoin, Blockchain and the Baltic States
The Baltic States is a geopolitical term for three sovereign states in Northern Europe on the Eastern coast of the Baltic Sea. These are Estonia, Latvia, and Lithuania. The three countries cooperate on a regional level in several intergovernmental organizations. They include the European Union, NATO, and Organization for Economic Cooperation and Development (OECD). While on the same page politically and economically, they each have a separate approach to cryptocurrency and blockchain technology.
Estonia announced plans to launch a state-administered national cryptocurrency, unveiling the Estcoin that would be centrally administered by the Republic of Estonia and launched as an ICO. Estcoin would not only be an alternative currency made available to citizens, but also to investors worldwide through its residency program. That is, until European Central Bank’s President Mario Draghi rejected the idea.
Draghi also publicly dared members of state to introduce their own currency in any form. “The currency of the eurozone is the Euro,” he insists. Analysts argue that Estcoin may still be a viable alternative through a public-private partnership. The next stage would require a whitepaper submission from an ICO. It would most likely be coming from Estonia’s E-residency scheme’s public relations department.
Latvia’s outlook on cryptocurrencies is a bit more progressive, even going as far as introducing a 20% capital gains tax on earnings. In order to enforce this, the Ministry of Finance is mulling over comprehensive cryptocurrency regulations. Preparations are under way by a working group tasked under Prime Minister Māris Kučinskis. The group will study market risks and evaluate potential benefits associated with cryptocurrencies. Cryptocurrencies are not yet legal tender. However, members of the Financial and Capital Markets Committee have publicly stated that cryptos like Bitcoin can “function as a means of exchange.”
The Lithuania government’s approach is a bit more serious. The director of the Financial Crime Investigation Services (FNTT) hosted a seminar recently to discuss “huge cash flows” associated with initial coin offerings as a potential fraud issue. The goal was to determine the position amidst bankers, politicians, and the State Security Department. The country has experienced a substantial uptick in cryptocurrency-related business trends. Still, it has yet to release any meaningful guidelines or regulations that would provide clarity or transparency.
Supporting Distributed Ledger Technology
While each country has its own approach on how to move forward with cryptocurrencies, they’re united in the development of blockchain and distributed ledger technologies (DLT). A statement released by Baltic Finance Ministries reads, “The Estonian Ministry, the Latvian Ministry, and the Lithuanian Ministry recognize the importance of the development of the capital market and a stronger institutional framework to handle the cross-border challenges in the Baltic States. Supporting the development of capital market innovations and new technologies with consideration for regional fintech solutions, e.g. distributed ledger technology.”