Latvia Pioneers Use of Crypto-Assets for Share Capital Contributions

In a significant stride towards integrating digital assets into mainstream finance, Latvia has amended its Commercial Law to allow the use of crypto-assets for share capital contributions in limited liability and joint-stock companies. Effective from December 30, 2024, this legislative change aligns with the European Union's Markets in Crypto-Assets (MiCA) Regulation, aiming to bolster Latvia's position as a competitive destination for blockchain and crypto-asset enterprises.

Key Provisions:

• Permissible Crypto-Assets: Companies can now utilize asset-referenced tokens (ARTs) and e-money tokens (EMTs) for share capital payments.

• Valuation Methodology: The value of these crypto-assets can be determined based on the average price over the six months preceding the valuation date on a MiCA-compliant trading platform. This approach simplifies the valuation process by removing the necessity for external expert assessments.

• Deposit Requirements: To ensure transparency and compliance with anti-money laundering regulations, the crypto-assets must be deposited either into a distributed ledger address associated with the company or an account with a MiCA-registered crypto-asset service provider.

Implications for Businesses:

This legislative advancement offers several benefits:

• Enhanced Investment Opportunities: By accepting crypto-assets, companies can attract a broader range of investors, particularly those active in the digital asset space.

• Streamlined Capital Formation: Utilizing crypto-assets can expedite the capital contribution process, reducing reliance on traditional banking systems.

• Promotion of Innovation: This move underscores Latvia's commitment to fostering a progressive business environment conducive to technological innovation.

While the adoption of crypto-assets for share capital contributions is still in its nascent stages, this regulatory development marks a pivotal step in integrating digital assets into the corporate finance landscape.

Source - https://www.venturefaculty.io