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Baltic Finance Ministries Decide to Support Blockchain Technology Development

The finance ministries of the Baltic states have expressed their support to the development of Blockchain or distributed ledger technologies (DLT). The aim is to help in the advancement of capital market innovations.

In their recent Memorandum of Understanding (MOU), the ministries for Estonia, Latvia and Lithuania have announced their cooperation on several actions aimed at expanding and developing their economies. The actions include the promotion of DLT to foster innovations in the capital markets.

Part of the MOU 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. … [And] supporting the development of capital market innovations and new technologies with a consideration for regional Fintech solutions, e.g. distributed ledger technology.”

Estonia and Lithuania’s efforts in the Blockchain industry

Both Estonia and Lithuania have already tackled DLT in the past, particularly the initial coin offerings (ICO) and other aspects of the technology.

In October 2017, regulators in Lithuania have issued guidance covering the Blockchain funding use case. The regulators have also warned the consumers that ICOs are not yet regulated and that investors who will participate in them are risking the possible loss of their entire funds.

Meanwhile, Estonia has been very supportive of the technology. In fact, the Estonian government has even planned to develop its own digital currency called “estcoin” to be used for its e-residency program. Under the plan, the proceeds raised from the program will be used to establish a public-private sovereign wealth fund which will invest in digital infrastructure projects and technology startups.

Several institutions such as the European Central Bank, however, have criticized the country’s “estcoin” initiative. Despite the criticisms, Estonia may still launch its proprietary virtual currency as a “quasi-official entity.”

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Baltic Nations Agree to Support DLT Development

Government officials in the Baltics have struck an accord that includes a commitment to support the development of technologies like blockchain.

In a newly released Memorandum of Understanding, the finance ministries for Estonia, Latvia and Lithuania agree to cooperate on a number of actions to expand and develop their economies – a process which, as the document outlines, would include the promotion of distributed ledger technologies (DLT) to aid in capital market innovations.

In the memorandum, the countries note:

“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. … [And] supporting the development of capital market innovations and new technologies with a consideration for regional FinTech solutions, e.g. distributed ledger technology.”

Neither Estonia nor Lithuania are new to the blockchain industry. Both nations have discussed initial coin offerings (ICOs) and other aspects of the technology in the past, with Lithuanian regulators issuing guidance related to the blockchain funding use case just last month.

The country took a cautious stance, letting consumers know that ICOs are unregulated and the risk of investors losing their funds is “particularly high.”

Estonia, on the other hand, appears far more keen on the tech, going so far as to consider offering its own cryptocurrency for its e-residency program. While that “estcoin” effort been criticized by institutions like the European Central Bank, the country may still try to launch it as a “quasi-official entity.”

Baltic flags image via Shutterstock

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