The discussion concerning the necessity of drafting cryptocurrency-related legal framework commenced yesterday at the dedicated meeting of Latvian Saeima Budget and Finance Committee. The officials from the Financial and Capital Market Commission, the Ministry of Finance, the Bank of Latvia and the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity came up with their considerations on the issue.
As explained by the and Capital Market Commission’s representatives, cryptocurrency is not regarded as a legal means of payment in Latvia. However, its functioning as a medium of exchange may be considered as a viable option despite its high volatility, insufficient transparency and other related risks.
At the same time, Edvards Kusners from the Bank of Latvia noted that most of the cryptocurrency-associated risks come from the lack of expertise in the matter, while pointing out that the establishment of a comprehensive legal framework in the field would help greatly in mitigating such risks. His view was shared by Dmitrijs Kacanovs from the Association of Latvian Payment and Electronic Money Service Providers who also added that the government should adopt consistent and balanced approach to the matter.
The Finance Ministry’s representative Astra Kalane informed that, in the Ministry’s opinion, cryptocurrency transactions in Latvia could be applied capital gains tax, which is currently set at 20 percent. The tax would be paid the moment a transaction is executed, she said.
As reported by the representatives of the Ministry of Finance, Latvian Prime Minister Maris Kucinskis has issued an order for organizing a governmental task force that would analyze potential pros and cons of cryptocurrencies and possible measures for their regulation. The Saeima Budget and Finance Committee Committee, in turn, agreed to cooperate with the premier’s task force in drafting the cryptocurrency regulation.
Cryptocurrency-related issues will be further discussed at the Committee’s forthcoming meetings.
In November 2017, Ministers of Finances of Estonia, Latvia and Lithuania released a memorandum of understanding, where they declared the intention to collaborate on the development of DLT technologies, including blockchain.