Crypto Overview in Latvia

Regulatory data is for informational purposes only and may not reflect the most current legal developments. Always consult qualified professionals before making decisions.

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, EU 2023/1114) 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 Kriptoaktīvu pakalpojumu likums (Crypto-Asset Service Law) on 30 June 2024 as the national companion legislation, designating Latvijas Banka as the competent authority, setting fees, penalties, and transitional arrangements.

Tax Treatment

For individuals, capital gains from cryptocurrency are taxed at 25.5% personal income tax, which is the standard progressive rate applying to income up to EUR 105,300. 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 EUR 1,000 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 additional 3% personal income tax surcharge on non-resident disposal income from publicly traded crypto-assets from 1 January 2025 through 31 December 2027. For corporations, Latvia’s distributed-profits model means 0% corporate income tax on retained profits, with a 20% rate applying only when profits are distributed. Because the taxable base is calculated by dividing net profit by 0.8 before applying 20%, the effective rate on the distributed amount is 25%.

Regulatory Oversight

Latvijas Banka (the Bank of Latvia) is the primary regulator, having absorbed the Financial and Capital Market Commission (Finanšu un kapitāla tirgus komisija, FKTK) on 1 January 2023. This merged institution handles CASP licensing, prudential supervision, and market conduct oversight. Prior to 30 December 2024, the Valsts ieņēmumu dienests (State Revenue Service, SRS / VID) served as the AML supervisor for Virtual Asset Service Providers under Latvia’s AML law (Noziedzīgi iegūtu līdzekļu legalizācijas un terorisma finansēšanas novēršanas likums), operating a registration-based framework rather than a formal licensing regime. Under MiCA, that registration regime closed to new applicants on 30 December 2024. The Finanšu izlūkošanas dienests (Financial Intelligence Unit, FID) receives and processes suspicious transaction reports and serves as Latvia’s FATF/MONEYVAL liaison. The Consumer Rights Protection Centre monitors advertising, especially for high-yield crypto products.

Business Environment

Banking Relationships

Latvia’s banking sector underwent fundamental transformation following the 2018 ABLV Bank collapse. In February 2018, the U.S. Financial Crimes Enforcement Network (FinCEN) designated ABLV Bank as an institution of primary money laundering concern. The European Central Bank subsequently withdrew ABLV’s license; the bank entered voluntary self-liquidation and its license was cancelled on 11 July 2018. The episode 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 around 53% 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 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.

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 EUR 369 million in annual turnover and EUR 91 million 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. The FinTech Latvia association supports ecosystem development and advocacy. 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, direct SEPA access for licensed payment providers, and Riga’s connectivity as a regional hub.

Crypto License in Latvia

Since 30 December 2024, any firm providing crypto-asset services professionally in Latvia must hold formal authorization from Latvijas Banka under MiCA. The Kriptoaktīvu pakalpojumu likums (Crypto-Asset Service Law), which entered into force on 30 June 2024, designates Latvijas Banka as the competent authority and establishes the licensing framework, fees, and transitional provisions. Pre-MiCA firms registered with the SRS before 30 December 2024 could continue operating until 30 June 2025 by submitting a CASP application by that date; once filed, operations may continue through the review period. The overall transition extends to 30 December 2025. Latvia chose a 12-month window rather than the maximum 18-month period permitted under MiCA Article 143, signaling intent to reach full MiCA compliance sooner.

Licensing Requirements

MiCA establishes three capital tiers for CASPs, and Latvia applies these directly. Class 1 services, covering advice on crypto-assets, reception and transmission of orders, and placing of crypto-assets, require minimum own funds of EUR 50,000. Class 2 services, which include execution of orders, exchange of crypto-assets, and custody and administration, require EUR 125,000. Class 3 services, meaning operation of a trading platform for crypto-assets, require EUR 150,000. Where 25% of a firm’s fixed overheads from the preceding year exceeds the applicable threshold, the higher amount applies.

Beyond capital, applicants must demonstrate a governance structure with at least two fit-and-proper board members, one residing in Latvia, and designate a qualified Money Laundering Reporting Officer (MLRO). The firm must maintain an AML/CFT program aligned with banking-grade customer due diligence standards, apply the travel rule for transfers exceeding EUR 1,000, and comply with Digital Operational Resilience Act (DORA) ICT requirements. Licensed CASPs face quarterly external AML audits and an annual supervisory levy of 0.6% of gross revenues from crypto services, minimum EUR 3,000 per year.

Authorized Activities

A Latvian CASP authorization covers any combination of the ten services defined in MiCA Article 59, including custody and administration, trading platform operation, crypto-to-fiat and crypto-to-crypto exchange, order execution and reception/transmission, placing, portfolio management, advice, and transfer services. Authorization is issued only for the specific services applied for; adding activities requires a variation application. Once authorized, a Latvian CASP can passport across all EU member states without separate national authorizations in each jurisdiction.

Application Process and Timeline

Latvijas Banka began accepting formal CASP applications on 1 January 2025. On receiving a submission, Latvijas Banka has 25 working days to check completeness; this stage does not assess content quality. Once declared complete, a substantive review of 40 working days begins, extendable where additional documentation is requested. A well-prepared submission typically concludes in three to six months; complex cases can reach nine months. The application fee is EUR 2,500 and a EUR 5,000 license issuance fee is payable on authorization. The Innovation Hub offers free pre-licensing consultations, with a 48-hour response target, before formal filing.

Latvia issued its first two MiCA CASP licenses in December 2025: BlockBen SIA received authorization on 3 December 2025, becoming the first CASP licensed in Latvia and the second in the Baltic states under MiCA. Nexdesk followed on 10 December 2025. As of that point, five further applications were under review, twelve companies were in pre-licensing consultations, and more than 100 international firms were exploring Latvia as their EU regulatory base.

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, which allows a Latvia-issued CASP authorization 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 projections of over 100 new jobs and more than EUR 7 million 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 CASPs must conduct quarterly external AML audits, maintain customer due diligence aligned with banking standards, comply with the travel rule for transfers exceeding EUR 1,000, and ensure two fit-and-proper board members reside in Latvia. Penalties for non-compliance reach up to EUR 5,000,000 or 3% of previous-year turnover.

Regulatory Evolution

Latvia achieved a notable milestone as the first country 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 on 13 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 FID 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 FATF/MONEYVAL follow-up from its 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 permissive regime to a dramatically tightened one. Latvia aims to balance welcoming innovation with regulatory credibility, with MiCA passporting central to that strategy: authorization obtained in Latvia enables cross-border operations throughout all EU member states, making licensing efficiency a direct competitive asset.