Baltic Finance Ministries Decide to Support Blockchain Technology Development

By Joshua Althauser

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.”