The Baltic state of Latvia may be a fledgling in terms of fintech development but it is beginning to make real inroads into developing the space, writes Fintech Switzerland.
Fintech has a rapidly growing footprint in the startup scene and cryptocurrency interest is growing despite government’s uncertainty regarding regulations in the sector.
Latvia currently levies a 20% capital gains tax, and applying it to cryptocurrency would reportedly require a change in the country’s tax laws. Currently, cryptocurrencies are not recognized under existing legislation. However, its exponential growth in the Baltic country has generated an increased interest from the government as a potential tax revenue.
Latvia is still lagging behind its crypto-friendly neighbor Estonia, which is beginning to attract outside companies due to its innovative and vibrant crypto community. Estonia has a significant internet penetration and has recently considered its own national token, the Estcoin, although it later rejected the proposal for a CBDC.
However, Latvia is well networked, occupying the third position in the OECD with its fast fiber-optic broadband and has several government programs active after launching the introduction of a startup visa in 2017. This change to legislation introduced new tax laws which effectively doubled venture capital investors’ money for new companies.
Along with an EUR 15 million hand out to seed investments and several conferences held in Latvia’s capital Riga every year, the fintech space is catching up with its neighbors. The Latvian Startup Association also promotes new business in the country, although with such a small market and a population of 2 million, business is increasingly searching for new overseas markets.
In March 2018, Latvia hosted an international discussion between industry experts on the future of fintech in the Baltics and the overall EU, which featured the vice-president of the European Commission, Valdis Dombrovskis, as keynote speaker.
European fintech platform and community B-Hive recently released a research paper showing that the most developed technological area in the country’s economy is now fintech with a startup industry worth USD 878 million, with blockchain technology a contributing factor.
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