Since mid-August, the number of licensed crypto‑asset service providers in the European Union has increased by 52%, reaching 82 companies. Latvia, however, has not yet issued a single license, because the Bank of Latvia has concerns about the potential market participants’ reputation and level of maturity, – this was emphasized at a meeting of the Saeima Sustainable Development Committee’s Subcommittee on Innovation Ecosystem Development by the Head of the Financial Technology Supervision Department of the Bank of Latvia, Marine Krasovska.
However, Krasovska did not advertise that she came to the Financial and Capital Market Commission (then FKTK, now merged into the Bank of Latvia) after working at the notorious crowdfunding platform Grupeer, where she was Director of Lending when this platform defrauded thousands of investors. Later she was a co‑owner of a similar‑profile company, YieldUp, which ended its operations in bankruptcy. Although Krasovska has erased this stain from her CV and from the internet, it turns out that the number of defrauded investors is large enough for such facts to be remembered. Apparently, Article 7 of the State Civil Service Law on impeccable reputation does not apply to employees of the Bank of Latvia. However, it cannot be ruled out that it is the Bank of Latvia itself, rather than the companies, that is creating the reputation risks.
Although a year ago Latvia committed to be almost the first country to start issuing licenses to crypto‑asset service providers, in practice not a single license has yet been issued. At the committee meeting, the Head of the Licensing and Sanctions Department of the Bank of Latvia, Agnese Alaine, said that “active work is under way.” Currently, 6 applications for licenses have been received, 2 of which have been deemed complete, while the rest have been returned for clarification. Twelve applications are in the pre‑licensing phase, i.e. the consultation phase. Interestingly, in August of this year 5 companies were in the licensing process, and 20 companies in the pre‑licensing consultation process. This means that the number of interested parties is decreasing and they are choosing other countries.
Representatives of the Bank of Latvia took part in the meeting remotely, despite the fact that the Bank is located 200 meters from the Saeima, which prompted incomprehension from the chair of the Saeima committee meeting, MP Andris Kulbergs (United List). He also noted that ten years ago Latvia was ahead of its neighbors in the financial sector, but is now lagging behind by a step.
At the meeting, representatives of the Bank of Latvia said that applicants were submitting low‑quality applications and were not engaging serious consultants in the process, which was questioned by the Head of the Latvian Blockchain Development Association, Reinis Znotiņš: “I find it hard to believe that all applications are of poor quality. After turning to Latvia, companies then obtain licenses in Malta, Austria… the argument that companies do not engage serious consultants does not stand up to scrutiny; in fact, they all engage consultants! It looks like we want to be the most proper and the strictest… If we do not start issuing licenses soon, we will remain exactly where we are,” he said, adding that “on paper” Latvia has one of the best and most competitive regulatory frameworks.
“I don’t like that we seem to set ourselves a goal, but it turns out there is no goal at all. Among the goals there isn’t even 1 license by the end of the year, only the regulation,” said Kulbergs, continuing: “Of course, we do not need illegal money or cyber‑security risks, but it seems that elsewhere everything works, while here it does not.” MP Aiva Vīksna (AS) agreed with him, saying that Latvia itself had created the opportunity to attract investors and to be a leader in this field, doubling the economy, but in the end spoiled this opportunity itself.
Inc. has already reported that by issuing a MiCA license to the US company Robinhood, the Bank of Lithuania has ensured that the financial technology giant will open its first European office in Lithuania.
Originally published at https://inc-baltics.com/mica-regulejums-konkuretspejigi-uz-papira-prakse-cus/
Like
Love
Happy
Haha
Sad
