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Financial Intelligence unit’s Conference on the Future Framework of Crypto Assets: key highlights

The Financial Intelligence unit’s of Latvia (FIU Latvia) Conference on the Future Framework of Crypto Assets took place on the 18th of May in Riga, National Library of Latvia.

The conference gathered experts, thought leaders and practitioners from around the world to share their insights and experiences in navigating the complex world of crypto assets. Discussions focused on the policies surrounding cryptocurrencies, the evolving regulatory frameworks, and the best practices in supervision to ensure the integrity, stability, and security of crypto markets. The view from the industry leaders was also prominently featured with the focus on how crypto asset service providers operate and work with the financial sector, regulators, policy makers.

The conference was opened by the acting Head of the FIU Latvia Toms Platacis and Kristīne Černaja- Mežmale, Member of the Council, Bank of Latvia.

Among the key highlights of the conference were:

• A scene setter presentation by Dr Jonathan Galea (CEO, BCAS) on potential issues regarding the scope of MiCA (Markets in Crypto assets) regulation, the positive experience of existing crypto regulations in Malta and potential for improvement, and discussion on similarities and differences between traditional finance and cryptocurrencies.
• Paulis Iļjenkovs from FIU Latvia hosted a fire-side chat with Janet Ho, former policy-maker at FATF and currently Head of EU policy at Chainalysis. Janet outlined the technicalities of the EU MiCA regulation, stressing the necessity for the industry and policy makers as well as regulators to anticipate the upcoming regulation;
• A panel discussion on crypto asset policies around the world examined in detail the cases of UAE, Switzerland, in particular. Uldis Cērps, Advisor at the Central Bank of UAE, laid out how the mechanism of financial free-zones worked in Dubai. Ksenija Korolova from Crypto Finance Group talked about the main principles of regulation that should concentrate on technological neutrality, same risks – same rules and content over form. Michal Gromek, expert at the OSCE, talked about the challenges in the area of regulation and supervision: often there are problems with transposing the financial sector supervision rules to CASP supervision which at times does not work due to inherent differences;
• Another panel discussion was on supervision of CASPs – Dr Lisa Cameron from House of Commons, discussed the UK approach to crypto that includes both aspects – that of regulation and supervision but also that of not standing in the way of technological innovation. Matis Mäeker, Head of FIU Estonia laid out how crypto regulation had developed historically in Estonia, starting as early as 2014. In the view of Estonian FIU, the most significant risk of crypto assets is not the AML or TF risks, but the risk of volatility of the funds that need sound prudential supervision. Ariun Bold from FIU Mongolia discussed the latest developments – crypto market started to expand quickly in 2020, that prompted the need of a clear regulation that was developed and came into force in already in June 2022.  Jose Enrique De Pool Miqui from Dominican Republic Bank Superintendence outlined how the Central Bank has taken a rather conservative stance in regards to crypto assets since 2016, which has not stopped the public from using cryptocurrencies, creating some gaps;
• Reinis Znotiņš from Latvian Blockchain Association moderated the panel on Pre-requisites to choose the jurisdiction of incorporation: CASP view. Karolis Jonuska, Binance, pointed to the existing misconception that CASPs prefer to avoid being regulated. In fact, many CASPs, including Binance, welcome regulation and a clear set of rules, that allow them to plan and expand. Dejan Davidovic, Kriptomat Group also pointed to the importance of clear regulation that for many CASP owners and leaders (who often are not lawyers) significantly helps starting and developing their businesses. Dejan also pointed to the importance for Latvia to take advantage of MiCA, implement it as soon as possible, as clear as possible and start promoting it in international fora. Mārtiņš Puķe, Gravity Team emphasized the role of MiCA from the perspective of not just protecting customers or preventing financial crime, but also enabling innovation and technological advancement. Latvia has already a good experience in the area of FinTech, it also has a favourable tax regime and if a successful MiCA compliant licencing regime is adopted, there is a good perspective for Latvia to become a hub for CASPs.
• Dr. Jonathan Galea from BCAS moderated a panel discussion on Risks and opportunities of working with crypto assets focusing on the perspective of banks. Howard Rawstron from Lloyds Banking Group pointed to a recent change in the general approach towards crypto that is becoming less conservative comparing to the past. Jurgen Repolusk from Erste Bank, Austria stated that MiCA regulation is fixing many issues but some are still to be addressed such as decentralized finance. According to Andres Kitter of LHV Bank, banks resist being forced to open a bank account that does not fit their risk tolerance since customers who entrust banks with their money expect them to conduct business legally and correctly. Laima Letiņa from Finance Latvia Association noted that in traditional banking sector there is interest in crypto and CASPs, however it will always be segmented and there will never be the same crypto risk appetite across all of the sector participants.
• Aija Zitcere, Director of Financial Markets Policy Department of Ministry of Finance, Latvia and Daina Ispodkina, Counsellor for Ministry of Finance, presented Latvia’s future crypto assets framework. The development of capital markets and rising lending activity, as well as sustainable finance, digitalization and innovation, which includes National FinTech plan, are currently the financial market’s top goals. State Revenue Service currently oversees and registers VASPs; going forward, the Bank of Latvia will be responsible for licensing, AML compliance, and prudential oversight. 

The photos of the conference are are available following this link https://flic.kr/ps/42gt7v. 

The FIU Latvia is grateful to all the speakers, moderators and participants of the conference and looks forward to upcoming events!

Conference was organized under EEA Financial Mechanism period 2014-2021 programme “International Police Cooperation and Combating Crime” project No. EEZ/FID/2021/6 “Improvement of Employee Knowledge in Combating Money Laundering in Latvia”