Latvia

Disclaimer: This overview is provided for informational purposes only and does not constitute legal or financial advice. Cryptocurrency regulations change frequently. Always consult qualified legal professionals and official government sources before making decisions related to cryptocurrency activities in Latvia.

Legal Classification & Regulatory Framework

Cryptocurrency Status

Cryptocurrencies are not legal tender in Latvia but are legally recognized as a “contractual means of payment,” defined as a digital representation of value that can be traded, transferred, or used for settlement or investment. Private parties may settle contracts using Bitcoin, Ethereum, or stablecoins, provided obligations are reported in euros for tax purposes. For taxation, crypto is treated as property, with gains classified as “income from capital increases.”

Since 30 December 2024, the EU Markets in Crypto-Assets Regulation (MiCA) is fully applicable in Latvia, categorizing crypto-assets into three groups: asset-referenced tokens (including stablecoins), e-money tokens, and other transferable crypto-assets. NFTs and assets already regulated under existing EU financial directives are excluded from MiCA’s scope. Latvia enacted the Crypto-Asset Service Law on 13 July 2024 as the national companion legislation to implement MiCA, designating competent authorities, fees, penalties, and transitional arrangements.

Tax Treatment

For individuals, capital gains from cryptocurrency are taxed at 25.5% (a 20% base rate plus a 5.5% solidarity contribution). Taxable events occur when crypto is converted to fiat currency or tangible goods, not on crypto-to-crypto swaps. Gains are calculated as the sale price minus acquisition cost, including commissions, fees, and loan interest. Losses can offset gains from other crypto sales within the same tax year, and amended declarations allow future offset. If gains exceed 1,000 EUR in a quarter, they must be declared by the 15th of the following month and paid by the 23rd. Below that threshold, annual reporting applies with a January deadline. Records must be maintained for at least five years. Crypto exchange qualifies as a financial transaction, so no VAT registration is required for private trading.

To attract foreign crypto businesses, Latvia exempted the 3% withholding tax on non-resident crypto-asset disposal income from 1 January 2025 through 31 December 2027, with an impact assessment due by July 2027. For corporations, Latvia’s reinvestment-friendly tax system means 0% corporate tax on retained profits, with a 20% rate applying only when profits are distributed.

Regulatory Oversight

Latvijas Banka (the Bank of Latvia) is the primary regulator, having absorbed the Financial and Capital Market Commission (FKTK) on 1 January 2023. This merged institution handles CASP licensing, prudential supervision, and market conduct oversight. The State Revenue Service maintains the AML register and verifies KYC compliance. The Financial Intelligence Unit reviews suspicious transaction reports, particularly involving exchange cash-outs. The Consumer Rights Protection Centre monitors advertising, especially for high-yield crypto products.

Business Environment

Banking Relationships

Latvia’s banking sector underwent a fundamental transformation following the 2018 ABLV Bank scandal, when FinCEN designated the bank as a primary money laundering concern. The collapse triggered sweeping reforms: Latvia banned non-resident shell firms from opening bank accounts, restricted accounts for entities from nations without financial disclosure requirements, and dramatically reduced non-resident deposit flows. Non-resident deposits fell from 53.4% of total deposits in 2015 to under 20% by mid-2018. In September 2024, FinCEN withdrew the ABLV designation, recognizing Latvia’s “substantial” post-crisis reforms.

For crypto businesses, the post-cleanup banking environment actually offers advantages. Licensed CASPs can access direct SEPA payment infrastructure through Latvijas Banka. Capital requirements must be held in an EU credit institution. The MiCA licensing framework provides clear pathways for crypto firms to establish banking relationships, backed by Latvia’s now-stronger regulatory reputation.

Licensing Requirements

The Crypto-Asset Service Law defines ten licensable activities: custody and administration, trading platform operations, crypto-to-fiat exchange, crypto-to-crypto exchange, order execution, placement services, order reception and transmission, advisory services, portfolio management, and transfer services. Capital requirements range from 50,000 EUR for advisory services to 125,000 EUR for exchange and custody, and 150,000 EUR for trading platform operators. If a quarter of fixed overheads from the preceding year exceeds these thresholds, the higher amount applies.

Application processing costs 2,500 EUR, with a 5,000 EUR license issuance fee and an annual supervisory levy of 0.6% of gross income from crypto services (minimum 3,000 EUR per year). Latvijas Banka targets decisions within 60 days of a complete application, with the overall process taking three to nine months. Free pre-licensing consultations are offered with a 48-hour response time. Firms that held an AML registration before 30 December 2024 may continue operating until 30 June 2025, provided they submit CASP applications by that deadline. The overall MiCA transition period extends to 30 December 2025.

BlockBen and Nexdesk received Latvia’s first MiCA-compliant licenses in early 2026. As of that time, five additional applications had been submitted, twelve companies were in pre-licensing consultations, and over 100 international firms were exploring Latvia as their EU base.

Innovation Support

Latvia has positioned itself as an accessible gateway to the EU fintech market. The Financial Technology Strategy 2025-2027 targets a 30% increase in fintech companies, 15% more investment, and an 18% boost in fintech-related employment. As of 2025, the country hosts 127 fintech companies employing over 3,600 people, generating 369 million EUR in annual turnover and 91 million EUR in tax contributions.

Latvijas Banka operates an Innovation Hub for compliance consultations, a Regulatory Sandbox for testing innovative products, a dedicated Blockchain Sandbox for crypto companies to trial business models before licensing, and a Synthetic Data Sandbox for regtech testing while preserving privacy. Latvia participates in the European Central Bank’s digital euro project but has no separate national CBDC initiative. Competitive factors include startup visa availability, a multilingual workforce (96% speak foreign languages), direct SEPA access for licensed payment providers, and Riga’s connectivity as a regional hub.

Market Characteristics

Adoption Patterns

Latvia’s crypto sector is oriented primarily toward professional services and EU market access rather than high-volume retail adoption. The country’s competitive licensing fees, relatively fast processing times, and the MiCA EU passporting mechanism (allowing a Latvia-issued license to enable operations across all EU member states) make it attractive to firms seeking an efficient EU entry point. The non-resident crypto tax exemption through 2027 further targets international service providers, with estimates projecting over 100 new jobs and more than 7 million EUR in labor tax revenue from attracted firms.

Industry Focus

The Latvian crypto ecosystem concentrates on exchange services, custody, and institutional infrastructure rather than retail-facing consumer products. The fintech sector benefits from Latvia’s strong technical talent pool and competitive operating costs within the EU. AML compliance is a significant operational consideration. Licensed crypto-asset service providers must conduct quarterly external AML audits, maintain customer due diligence aligned with banking standards, comply with the travel rule for transfers exceeding 1,000 EUR, and ensure two fit-and-proper board members reside in Latvia. Penalties for non-compliance reach up to 5,000,000 EUR or 3% of previous-year turnover.

Regulatory Evolution

Latvia achieved a notable milestone as the first country worldwide assessed under the revised FATF 6th round evaluation methodology. An on-site visit took place in November 2024, with the report adopted at the joint FATF/MONEYVAL plenary in June 2025. The Latvian Finance Ministry reported that the country achieved “high or substantial levels of effectiveness in all Immediate Outcomes, except one,” and the FIU was recognized as “a highly effective institution and a global leader in international co-operation.” This represents a significant recovery from the post-ABLV era, when Latvia was under enhanced follow-up from the 5th round assessment in 2018.

Within the EU, Latvia positions itself as a “middle path” among the Baltic states. Lithuania has taken a stricter approach with enforcement actions against unlicensed firms, while Estonia transitioned from a previously very permissive regime to a dramatically tightened one. Latvia aims to balance welcoming innovation with regulatory credibility. The MiCA passporting mechanism is central to this strategy, as authorization obtained in Latvia enables cross-border operations throughout all EU member states.

For Current Information:

• Latvijas Banka: Crypto-Asset Licensing
• Fintech Latvia: MiCA Regulation
• State Revenue Service (SRS)
• Financial Intelligence Unit of Latvia
• MONEYVAL: Latvia