MiCA licence in Latvia

In Latvia, the cryptocurrency sector is regulated by Latvijas Banka, which is authorised to issue licences to, and supervise, crypto service providers under the Markets in Crypto Assets Regulation (MiCA). Since this legislation came into force, companies operating in the digital asset sector have been required to obtain authorisation, and new market participants must obtain a licence before commencing operations. MiCA requirements apply to custodial services, crypto asset exchange operators, trading platforms, asset transfer intermediaries, consultants, crypto portfolio managers, and other CASP service providers. A detailed operational programme describing the services to be provided and how they will be delivered to users must be submitted as part of the application. The application must also include information on internal control and corporate governance mechanisms, including risk management procedures, accounting methods and transaction monitoring. As the regulator assesses the qualifications and reputation of the management, information about the members of the management bodies and shareholders is a mandatory part of the documentation. If there are individuals holding a qualifying share, confirmation of their reliability and the transparency of their capital sources must be provided.

Particular attention is paid to compliance and AML/KYC controls. The company must document its customer identification system, anti-money laundering measures, transaction control processes and the disclosure of information to the regulator. If crypto asset storage services are provided, the methods of segregating customer funds, the procedure for accessing wallets, recovery protocols, security audits and operator responsibility must be described. For trading platforms, a description of the rules for accessing the platform and the mechanisms for preventing manipulation and monitoring market behaviour is also required. The licensing application process is officially open, and the regulator allows for preliminary consultations. This enables potential issues to be identified in advance, facilitating a more efficient subsequent review process. Once the documents have been received, Latvijas Banka will analyse the company’s structure, verify its management team, assess potential risks and check the AML system is correct. They will then make a decision on whether to issue a licence. The licence obtained enables the company to operate not only in Latvia, but also to provide crypto services in all European Union countries via the regulatory passporting mechanism.

To successfully complete the procedure, it is important for the applicant to clearly define the category of services provided, as this determines the scope of the procedure, the list of required documents, and the extent of supervisory requirements. Companies entering the market for the first time must demonstrate a genuine EU presence, including an operating office, employees, a management structure, and an operational centre. Once a licence has been obtained, the organisation must comply with the supervisory regime, provide reports, maintain infrastructure and financial stability, and maintain a high level of control over client assets. This regulatory model aims to increase transparency in the crypto asset market, creating an environment in which innovation is combined with user protection, stable business processes and legal predictability. The Latvian approach makes the market more structured, allowing access only with strict compliance with MiCA standards.

MiCA regulations in Latvia

Crypto assets in Latvia are regulated in accordance with MiCA, which will become mandatory by the end of 2024. Latvijas Banka is the national regulator responsible for licensing and supervising crypto service providers. Any company working with digital assets must obtain a licence if their activities include the professional provision of crypto services. These include custodial storage, exchanging crypto assets for fiat currency or other tokens, managing trading platforms, transmitting and executing orders, advising clients, and managing token portfolios. To obtain a licence, a company must be a legal entity within the European Union and have its place of effective management and key management functions located within the EU. Together with the application, a company must submit an operational plan describing the types of services, the method of their provision and the target business model. The regulator also requires a detailed description of the internal management system, including the corporate structure, operational control mechanisms, risk management processes and anti-money laundering and customer verification policies. A key aspect of the licensing process is ensuring that client assets are held in separate custody and are not commingled with the company’s funds.

The level of own funds that a company must demonstrate before obtaining a licence depends on the types of services provided. The more complex and risky the activity, the higher the capital requirements. Organisations intending to operate platforms and perform custodial functions must demonstrate their technological and operational readiness. They must also describe their infrastructure, security, asset recovery processes, and measures to protect against unauthorised interference. Companies intending to issue tokens must disclose the asset circulation model, economic structure, and risks to holders. Before formally submitting an application, applicants can arrange a preliminary consultation with Latvijas Banka to receive recommendations on the documentation package and minimise the risk of their application being rejected. Once the review is complete, the licensed company is entitled to provide crypto services in Latvia and can expand its activities to other European Union countries via the regulatory passporting mechanism. Thus, MiCA in Latvia establishes a transparent and rigorous supervisory system to which all digital asset market participants are subject. Licensing protects users, creates stable business conditions and promotes the development of a regulated crypto sector, combining technological services with legal predictability and a high level of security.

Latvijas Banka allows financial market participants who already have a licence or authorisation to provide financial services, and who intend to expand their activities to include services involving crypto assets, to submit applications for authorisation. Such organisations may obtain authorisation to provide certain types of crypto services (e.g. custodial storage, exchange, trading platforms, order transmission and portfolio management) provided they comply with MiCA requirements. The application must include an operational programme detailing the types of services, the geographical area in which they will be provided, and the scheme for their provision. A description of internal management and control mechanisms is also required, including administrative, accounting and procedural rules aimed at reliable risk management. Applicants must submit details of the composition of management bodies and documents confirming the reputation and qualifications of managers. They must also disclose the structure of shareholders and owners with qualifying holdings and provide details of these holdings and the origin of capital. If the company intends to provide services related to the storage, exchange, or trading of crypto assets, the application must contain a detailed description of operations, including asset storage policies, secure storage procedures, the segregation of client and company funds, order execution mechanisms, price formation algorithms, and procedures for executing transactions and transferring assets. When providing consulting or portfolio management services, additional information is required on staff qualifications, risk assessment methods and client asset management policies.

A transition period is provided for existing financial organisations, who have the opportunity to expand their list of services and obtain authorisation for crypto services under their existing licence, provided they submit the relevant application. The regulator accepts such applications under a procedure comparable to the issuance of a full CASP licence. Latvijas Banka offers pre-licensing consultations, during which interested parties can discuss the structure of their future application and receive recommendations regarding documents, internal policies and compliance. This helps them prepare the correct package and increases their chances of successful authorisation. Once authorised, the organisation is entitled to provide permitted crypto services in Latvia and, thanks to the MiCA passporting mechanism, expand its activities to the entire European Union without needing to obtain an additional licence in each country. Therefore, for financial institutions already operating in the market, there is a simplified process for entering the crypto sector. It is sufficient to submit an extension application and confirm compliance with management, compliance procedures, and structure. After a successful review, they can then legally serve clients with crypto assets within the framework of MiCA.

MiCA regulations in Latvia

In Latvia, the issuance of asset-referenced tokens is regulated as a financial activity requiring official authorisation from the Bank of Latvia. Only authorised legal entities or credit institutions that meet the requirements can legally issue such tokens and offer them publicly or initiate their admission to trading platforms. However, if the average annual token issuance exceeds the €5 million threshold, MiCA regulation will apply; otherwise, certain exemptions are possible and tokens may be issued under simplified conditions provided that transparency requirements and the preparation of a white paper are met. An application for authorisation requires the preparation of a detailed package of documents. This includes the issuer’s business model and operating programme: a description of how, by whom and by what mechanism the tokens will be issued and under what conditions. A legal opinion must confirm that the token is an ART and not an electronic monetary instrument, for example, which does not fall under MiCA. Corporate governance schemes must also be provided, as well as the structure of management bodies and data on shareholders, especially those with significant stakes, with a description of their reputation and the origin of their capital.

Mandatory documents include a crypto-asset white paper prepared in accordance with MiCA requirements. This paper must disclose the token’s economic model, collateral mechanism, holder rights, risks, reserve structure, and redemption and exchange methods. An emergency response policy is also required, including a business continuity plan, data protection measures, an internal control system and descriptions of risk management mechanisms and technical infrastructure and security systems (both IT and operational). If the token is to be offered in other EU countries as well as Latvia, the application must include a list of these countries and a plan for entering them.

A fee is charged for submitting an application – the standard rate applies to legal entities that are not previously regulated financial institutions. After submission, Latvijas Banka will conduct an initial check to ensure that all the necessary materials have been provided. This will be followed by a qualified assessment, which will involve analysing the legal structure, risks and compliance with regulatory requirements. If everything is in order, a decision on authorisation is made. Authorisation issued by Latvijas Banka for an ART issue is valid in all European Union countries, granting the issuer the right to publicly offer tokens or seek their admission to trading on platforms under the European ‘passporting’ mechanism. This enables the project to be scaled up beyond Latvia without the need to obtain licences in each individual country.

Thus, the issuance of secured tokens in Latvia is possible provided there is strict compliance with regulatory requirements, from the detailed preparation of a white paper and corporate structure, to the establishment of a reliable IT infrastructure and transparent risk management policy. For those planning an issue, this provides an opportunity to operate throughout the European market legally, with the supervision and protection of investors’ and token holders’ interests. In Latvia, the issuance of e-money tokens is subject to MiCA and national supervisory requirements. To legally issue such a token, official permission must be obtained from the supervisory authority. To apply to issue an e-money token, an issuer must be a legal entity that is both registered and operating within the EU, ensuring the necessary ‘presence’ and supervision by the regulator.

When preparing an application, the issuer must submit a detailed operating model describing the token, its issuance and circulation mechanism, how it is secured, and guarantees of liquidity and return. They must also provide the terms and conditions for protecting holders. The company’s ownership structure must be disclosed, as well as information about beneficiaries and management bodies. It must also be demonstrated that the management has the necessary qualifications and reputation. The application must also contain details of internal policies and procedures, including internal control mechanisms, risk management, accounting and operational accounting systems, and compliance procedures. It must also include a contingency plan to ensure business continuity and the protection of customer and company funds, as well as IT security and audit procedures. A document similar to a white paper is also important: this should provide a detailed description of the rights of token holders, the terms of issue and redemption, reserves, the terms of exchange or return of funds, a description of risks and protection mechanisms, and the terms of disclosure of information to investors and holders. The issuer must also demonstrate how customer funds and the company’s own funds will be kept separate and how assets will be stored and protected.

After submitting an application, the regulator checks its completeness and compliance with regulatory requirements regarding ownership structure, financial stability, corporate governance and the operating model. If the decision is positive, the company will be granted the right to issue electronic money tokens and, if necessary, distribute them throughout the EU via a passporting mechanism. Thus, the issuance of e-money tokens in Latvia is possible, but only in strict compliance with regulatory standards, such as sufficient capitalisation, a transparent structure, professional management, clear governance rules, and the protection of token holders’ interests. This regulatory framework ensures legal predictability, investor protection, and operational stability – all of which are important conditions when working with digital assets in the European market.

In Latvia, as in other EU countries, the issuance of tokens that do not fall under the asset-backed or electronic money categories is regulated separately but within the framework of the regulator’s rules for crypto assets. The issuance of such ‘other tokens’ may be permitted if the issuer is a legal entity that is registered and operating within the EU, and can ensure transparency, risk management, and protection of holders’ interests. When preparing to launch a token, the company must develop a detailed issuance and circulation model, describing the token itself, its rights and functions, the issuance and distribution mechanisms, and the possible redemption process. The business model, expected load and distribution channels must also be disclosed. The issuer must be declared, as must the project managers, and the ownership structure and shares of participants must be disclosed. The qualifications and reputation of management and beneficiaries must also be confirmed.

Additionally, the issuer must provide internal management policies, including a corporate governance system, risk control, internal control procedures, accounting and reporting policies, and information and operational security measures to protect the token, infrastructure and interests of holders. A mechanism must be provided that allows token holders to be identified, transactions to be managed, transparency to be ensured and operations to be tracked, if necessary. If the token is to be offered publicly, a document similar to a white paper must be prepared. This must disclose the economic nature of the token, the rights of holders, the terms of circulation, the distribution structure, possible risks and methods of investor protection. This is critically important for the regulatory approach, as publicly offered tokens must meet disclosure and transparency standards.

Once all the documents have been collected and the issuance model prepared, the issuer submits an application to the supervisory authority. The regulator then conducts an audit, assessing the legal and operational structure, business model, financial stability, management and control mechanisms, and compliance with security and asset protection requirements. The regulator also evaluates the transparency and quality of the information disclosed. Only if the result is satisfactory can the token be officially issued and offered to users. Thus, while the issuance of ‘other tokens’ in Latvia is possible, it requires careful preparation, from the legal, managerial, and operational structure of the company, to the development of a clear token model and secure protection mechanisms. This creates a reliable regulatory framework, allowing issuers to operate legally and predictably in the crypto asset market, while taking into account the interests of token holders and the regulator’s requirements.

Latvijas Banka is responsible for ensuring a clear legal classification of crypto assets, forming the basis for the regulation, licensing and supervision of the digital asset market. According to internal rules and European standards, crypto assets must be assessed on their technological, economic and legal characteristics – the functions, rights and obligations of the holder, and the nature of the asset itself. Classification distinguishes between several types of asset: asset-referenced tokens; e-money tokens; and other tokens, whose status is determined by their role, rights, and terms of circulation. It is important that the issuer or provider can document the basis on which the token is classified rather than simply declaring the category. This includes disclosing the economic model, collateral structure, holder rights, redemption, recalculation and conversion mechanisms, and transfer and control functions.

If a token is pegged to reserves – such as currencies, commodities or a basket of assets – it is considered to be asset-backed. The issuer must disclose the composition of the reserves, the management rules, the protection mechanism for holders and the conversion process. If a token performs a function similar to electronic money, it must comply with e-money standards taking into account liquidity, regulation, holder rights, issuer obligations and security requirements. The classification of other types of tokens – utility, platform, service, or others – depends on functionality and terms of circulation. When such tokens are issued and distributed, it is important that the rights of holders are clearly defined, legal uncertainty is eliminated and transparency is ensured. If a token does not have the characteristics of a security and its functions are limited to providing access to a service or platform or granting usage rights, it remains in the non-financial category and is regulated as a crypto asset rather than a security.

The classification of a crypto asset affects subsequent obligations such as licensing requirements, asset segregation, compliance procedures, disclosure, investor protection, capital adequacy, and internal control. Therefore, it is important to determine which category a token belongs to at the development and issuance stage, and to prepare the appropriate legal and operational structure. Clear classification creates legal certainty, allowing issuers, investors, regulators and users to understand exactly which rules apply to each asset – whether it is an asset-backed token, electronic money, a utility token or another digital asset. This strengthens trust, facilitates licensing and reduces the risk of legal disputes. In Latvia, therefore, any work involving cryptocurrencies and tokens requires a ‘substance over form’ approach – classification is based on economic substance and legal structure rather than technological packaging. This makes the regulation transparent and consistent, and ensures compliance with MiCA’s high standards.

The following documents are required for CASP companies to obtain a MiCA licence in Latvia:

To obtain a crypto-asset service provider licence, a company must prepare a complete set of documents confirming its readiness to operate in accordance with MiCA, ensuring the protection of clients in the financial market. The package must include an operational plan describing the types of crypto services, the proposed business model, the product structure, and the architecture of working with users. The regulator must also be provided with the company’s legal documentation, including registration details, articles of association, information on the ownership structure and ultimate beneficial owners, and information on the composition of the management bodies. Managers and key employees must provide proof of their qualifications, experience, and professional reputation, as the regulator will assess their ability to ensure sustainability and internal control. The second set of documents concerns the internal compliance system. The company must prepare and submit its AML/KYC policy, customer identification rules, transaction monitoring procedures and procedures for identifying suspicious transactions. This set of documents describes the reporting methodology, the procedure for communicating with the supervisory authority, the mechanism for escalating violations and the rules for maintaining internal documentation. Particular attention is paid to the risk management system – the package includes regulations on operational, market, technical and cyber risks, a description of internal controls and information on the role of the compliance officer.

When providing crypto asset storage services, a policy for the segregation of client funds must be provided, along with protocols for protecting access keys and physical and digital security measures. Procedures for restoring access and responding to incidents must also be provided. If the company plans to operate as an exchange or trading platform, it must also describe the rules for accessing the platform, price formation algorithms, order execution procedures and mechanisms for preventing market manipulation and abuse. For consulting services and crypto asset management, the investment methodology, risk assessment methods, portfolio management strategy and standards for working with client assets must be presented.

Financial documents form a separate element of the licensing process and include a business plan with forecasts, an income model, operating expenses, capital data and confirmation of own funds amounting to the sum required for the selected CASP licence class. The regulator assesses the financial stability of the business model and the company’s ability to fulfil its obligations and ensure business continuity. Additional information may be requested if necessary, such as agreements with technology providers, IT architecture, external audit reports, a description of corporate substance in the EU and evidence of an actual presence in Latvia. This package of documents serves as the basis for assessing the business’s maturity and readiness to operate under MiCA. The more structured and complete the materials are, the faster the company can obtain authorisation and the right to provide crypto services in Latvia and any other European Union country thanks to the passporting mechanism.

Stages of MiCA implementation in Latvia

MiCA implementation in Latvia took place in stages, including several consecutive phases aimed at transitioning from an unregulated crypto market to a transparent, licensed model. The first step was the formal adoption of the MiCA regulation at the EU level and its integration into the national financial supervision system. At this stage, the role of the Bank of Latvia as the authorised body responsible for issuing licences to crypto service providers was defined, and requirements for licensing, risk management, and customer protection were established. The next stage involved preparing the supervisory infrastructure: application forms, regulatory standards, applicant assessment procedures and internal requirements for capital and operational stability were developed. Consultations with market participants began, enabling existing and potential crypto providers to assess their chances of obtaining a licence in advance. The regulator focused on companies that were already operating in the market, providing a transition period during which they were required to submit an application if they planned to continue operating after MiCA came into full force.

Once the licensing procedure had been launched, Latvijas Banka began accepting applications from CASP providers. Companies were required to submit operational plans, internal policies, AML/KYC documents, proof of capital adequacy and evidence of management substance in the EU. A uniform procedure for submitting a package of documents was established for new market entrants, while financial organisations with an existing licence were given the opportunity to expand their activities by adding crypto services to their approved scope.

The final stage of MiCA implementation involves ongoing supervision and subsequent regulation. Licensed companies must submit reports, confirm compliance with security requirements, maintain the segregation of client assets and ensure sustainable operations. Licensed providers can now offer their services throughout the EU using the passporting mechanism, which has become a key regulatory tool. Thus, the implementation of MiCA has created a fully regulated environment for the crypto industry in Latvia, ensuring supervision, transparency, and a high level of user protection.

MiCA categorises crypto service providers based on the nature of their activities and level of responsibility. The first category includes companies that execute client orders, transmit instructions, or provide advice, but do not store assets. Such operators are subject to a minimum capital requirement of €50,000. The second category comprises organisations that provide custodial storage of crypto assets alongside exchange operations. For these organisations, the minimum own funds threshold is increased to €125,000. The third category comprises operators of trading platforms, infrastructure services and other providers of market micro-infrastructure, and they face the highest level of requirements. These operators must maintain capital of at least €150,000 to reflect the increased operational and technological risks associated with working in this market.

Obtaining a MiCA licence in Latvia incurs a fixed administrative fee of €2,500 to cover the cost of reviewing the documents and information submitted by the applicant. Once the application has been submitted, Latvijas Banka will conduct an initial assessment of its completeness, which will take up to 25 working days. If the documents are found to be correct and sufficient, the main review begins. Over the next 40 working days, the regulator analyses the business model, financial indicators, technical infrastructure, compliance system, asset storage procedure, and other key parameters, in order to decide whether to grant or refuse authorisation. This period may be extended if the information provided is insufficient or if additional verification is required; therefore, the quality and completeness of the application directly affects how quickly a licence can be obtained.

Taxation of cryptocurrency in Latvia in 2025

In Latvia, cryptocurrency is considered a capital asset and, in most cases, transactions involving it are subject to capital gains tax. If an individual sells crypto assets at a profit and withdraws the proceeds in fiat currency or another liquid equivalent, the difference between the purchase price and the sale price will be taxed at a rate of 25.5% in 2025. In this case, the taxable event is not the ownership of the crypto asset or its exchange for another cryptocurrency, but rather the moment of sale at which a profit expressed in traditional currency is realised. Therefore, the exchange of cryptocurrency for another cryptocurrency does not in itself create a tax liability if the financial result is not fixed in fiat currency at this stage. A tax relief regime will be in effect for non-residents in 2025: income from the sale of publicly traded crypto assets will be exempt from taxation. This has been introduced to incentivise the development of the crypto industry and attract foreign market participants, thereby making Latvia more competitive among European jurisdictions. The relief is temporary and will apply for several years.

When activities related to cryptocurrencies are systematic in nature – including trading, mining, staking, or providing services – the income received may be classified as business activity rather than capital gains. In this case, standard income tax or corporate tax rules for legal entities apply. Companies conducting transactions with crypto assets are subject to corporate tax in accordance with the general rules, and digital assets must be reflected in financial statements in accordance with the applicable accounting standards. Cryptocurrency-to-fiat exchange transactions are usually not subject to VAT, since digital currencies are treated as financial instruments, meaning that their purchase and sale are considered financial transactions rather than supplies of goods or services. However, taxpayers are still obliged to record and declare any profits arising from such transactions. It is essential for individuals to maintain detailed records of each transaction, including the date, entry and exit prices, commissions, exchange rate differences, supporting documents and asset value history. This data is used to calculate the tax base and also allows losses to be offset against subsequent declarations if they reduce the overall result for the tax period.

Thus, Latvia’s tax model for cryptocurrency is based on taxing the disposal of assets, while cryptocurrency exchange transactions are not recognised as income until converted into fiat or another asset with a specific value. Business taxation applies to commercial activities; non-residents are exempt from trading in public assets; and VAT does not usually apply. The regulator expects market participants to be transparent and accountable in their declarations, which creates a predictable taxation regime and reduces the risk of violations.

Latvia Tax Rates 2025

 How can lawyers from Regulated United Europe help you obtain a MiCA licence in Latvia?

Obtaining a MiCA licence requires thorough preparation. You will need to compile extensive documentation, develop internal regulations, confirm your capital, demonstrate operational readiness and establish a management structure that complies with AML/KYC standards. Regulated United Europe lawyers can support you throughout this process, from analysing your business model to the final approval of your licence by Latvijas Banka. The team conducts an in-depth audit of your crypto company, determines which services will require a licence, assesses the CASP class and capital requirements, and then creates a personalised licensing roadmap. When preparing the dossier, specialists will structure and develop internal policies covering: AML and KYC procedures, operational and information risk management mechanisms, a business plan, technical architecture, client asset segregation rules, order execution policies, cybersecurity standards and key storage and access recovery procedures. This enables the company to comply with MiCA requirements from the outset and reduces the likelihood of the regulator returning the documentation. If a local presence in the EU is required, the consulting group can assist with this, including providing a legal address and helping to select directors and a compliance officer.

At the application stage, Regulated United Europe prepares the full set of documents and liaises with Latvijas Banka. This allows the applicant to avoid technical errors, incorrectly completed forms, and data inconsistencies. The team handles all correspondence with the regulator, responding to requests and clarifying positions, and preparing corrections if necessary. This approach speeds up the review process and increases the likelihood of a positive decision. After receiving the licence, the lawyers continue to provide support by helping to build a reporting system for the regulator, implement internal procedures, launch operations and ensure compliance with post-licensing requirements. Companies working with Regulated United Europe receive legal support and a partnership model, in which licensing, compliance and operational launch strategy form a single workflow. Thus, Regulated United Europe‘s legal team provides a comprehensive service for entering the Latvian market under MiCA, covering everything from initial analysis to obtaining a licence and ongoing support. This makes the procedure more predictable and manageable, reduces regulatory risks, and enables companies to swiftly establish themselves in the European Union’s crypto services market.