In response to the phased implementation of the European Union (EU) Markets in Crypto-Assets Regulation (MiCA), the Central Bank of Latvia introduced a pre-licensing consultation service for local crypto-asset service providers (CASPs) in the country, according to an August 29 press release.
As part of Latvia’s efforts to align with MiCA, the initiative provides free guidance to companies looking to operate within the framework, helping them prepare for the formal licensing process that will begin in January 2025.
Details of the Central Bank of Latvia Pre-Licensing Consultations for Crypto Firms
The Central Bank of Latvia’s pre-licensing consultation program is designed to support crypto businesses by offering expert advice on regulatory compliance, documentation requirements, and preliminary readiness assessments.
Companies interested in acquiring MiCA-compliant licenses can request unlimited consultations. This allows them to clarify regulations, address compliance concerns, and fully prepare before officially submitting their applications in 2025.
Similarly, experts from the central bank will provide tailored guidance, ensuring CASPs meet the necessary regulatory standards under MiCA.
This proactive measure seeks to smooth the transition for firms, allowing them to enter the Latvian market confidently.
The Latvian Blockchain Association has also expressed strong support for the pre-licensing initiative.
Our Operations Manager, @EimanteRim, had the pleasure of attending a pivotal event today in Riga, focusing on the FinTech & Crypto sectors.
It was a great opportunity to engage with the Bank of Latvia & Latvian Blockchain Association. It offered us a unique platform to delve… pic. .com/ftYyMOeCMx
— Fideum (@FideumHQ) March 22, 2024
Reinis Znotins, the association’s executive director, emphasized the importance of the seamless transition in helping local CASPs navigate the new regulatory landscape.
By fostering a supportive environment for CASPs, Latvia is positioning itself as an attractive destination for crypto businesses within the European Union.
Latvia’s Growing Crypto Market and Regulatory Landscape
Latvia’s pre-licensing consultations are part of a broader effort to develop a robust crypto ecosystem.
In June 2024, the country advanced its “Crypto Asset Services Law,” providing a clear regulatory framework to support the growth of blockchain and crypto-related businesses.
💥SCHEME FOR DETERMINING WHICH CRYPTO-ASSETS FALL WITHIN THE SCOPE OF MICA (CENTRAL BANK OF LATVIA)💥https://t.co/PLyxBtnL2K pic. .com/KyfuJp6OhH
— ISO 20022…. LET'S DO IT (@Rohitku24694375) August 13, 2024
In addition, the Latvian authorities have taken a firm stance on ensuring regulatory compliance.
In July, the country’s financial crimes unit fined Payeer, a crypto payment service provider, $10 million for violating EU sanctions related to Russia.
Similarly, the Central Bank of Latvia has been integrating artificial intelligence (AI) and cloud technology into its operations, further aligning with the EU’s broader digital finance strategy.
However, Latvia’s future crypto market also faces some challenges.
In August 2023, the central bank released a survey that indicated a massive decline in crypto asset investment, with a 50% drop over the past year.
The survey attributed this decline to several factors, including instances of fraud and insolvency involving major market participants, misguided investments, and concerns over crypto’s association with money laundering.
The survey, based on payment card usage data, showed that only 4% of the Latvian population purchased crypto assets in February 2023, compared to 8% in the same period in 2022