The Markets in Crypto-Assets Regulation (MiCA) introduces a unified regulatory framework for crypto-assets across the European Union (EU), promoting legal certainty, investor protection, and market stability. One of the core requirements under MiCA is obtaining a Crypto-Asset Service Provider (CASP) license, mandatory for businesses offering crypto asset services.
This licensing ensures compliance with strict standards on governance, security, and anti-money laundering (AML), enabling licensed CASPs to operate seamlessly across all EU member states. Whether you are an emerging startup or an established operator, obtaining a CASP license is essential to access the EU’s vast and dynamic market for digital assets.
The Bank of Latvia (Latvijas Banka) is the competent authority overseeing CASP licensing under MiCA. Businesses operating or planning to provide crypto-asset services in Latvia must adhere to local implementation requirements alongside MiCA’s EU-wide provisions.
Our firm has a thorough knowledge of Latvian law, ensuring that your compliance efforts are efficient and effective.
We can help your business meet compliance requirements and unlock the potential of the EU crypto market!
The Latvijas Banka is the competent authority overseeing CASP licensing under MiCA
Key Numbers about a CASP License in Latvia
3 monthsaverage term of obtaining CASP license after application submission |
at least severaldirectors in a CASP |
up to €150kamount of the share capital depending from CASP activity |
up to 33%personal income tax (PIT) rate |
20%corporate income tax (CIT) rate on distributed profits |
25.5%capital gains tax (CGT) rate |
Legal Opinion about a CASP License in Latvia
Ganna Voievodina
Manimama
|
CEO
“Obtaining a CASP license in Latvia is essential for businesses offering crypto-asset services. Applicants must meet requirements, including robust AML/CFT compliance, a formal governance structure, and sufficient operational capital. Once licensed, CASPs must adhere to ongoing reporting obligations and maintain compliance with Latvian and EU regulations. A CASP license enhances credibility and provides access to the EU market under a clear regulatory framework”.
Types of Activities with a CASP License in Latvia
Providing custody and administration of crypto-assets on behalf of clients
This service means safekeeping or controlling, on behalf of third parties, crypto-assets or the means of access to such crypto-assets, where applicable in the form of private cryptographic keys. Holdings of crypto-assets on behalf of the clients shall be segregated from CASP’s holdings.
Operation of a trading platform for crypto-assets
This service contains of the management of one or more multilateral systems, which brings together or facilitates the bringing together of multiple third-party buying and selling interests for crypto-assets – in the system and in accordance with its rules – in a way that results in a contract, either by exchanging one crypto-asset for another, or a crypto-asset for funds.
Exchange of crypto-assets for funds
This service means the conclusion of purchase or sale contracts concerning crypto-assets with clients for funds by using proprietary capital.
Exchange of crypto-assets for other crypto-assets
This service means the conclusion of purchase or sale contracts concerning crypto-assets with clients for other crypto-assets by using proprietary capital.
Execution of orders for crypto-assets on behalf of clients
This service means concluding agreements to buy or to sell one or more crypto-assets or to subscribe for one or more crypto-assets on behalf of third parties and includes the conclusion of agreements to sell crypto-assets at the moment of their issuance.
Placing of crypto-assets
This service includes the marketing, on behalf of or for the account of the offeror or of a party related to the offeror, of crypto-assets to purchasers. Before placing the crypto-assets a CASP shall obtain the agreement of the issuers or any third party acting on their behalf.
Reception and transmission of orders for crypto-assets on behalf of clients
This service means the reception from a person of an order to buy or to sell one or more crypto-assets or to subscribe for one or more crypto-assets and the transmission of that order to a third party for execution.
Providing advice on crypto-assets
This service means offering, giving or agreeing to give personalized recommendations to a third party, either at the third party’s request or on the initiative of the a CASP providing the advice, in respect of one or more transactions relating to crypto-assets, or the use of crypto-asset services.
Providing portfolio management on crypto-assets
This service includes managing portfolios in accordance with mandates given by clients on a discretionary client-by-client basis where such portfolios include one or more crypto-assets.
Providing transfer services for crypto-assets on behalf of clients
This service means transfer, on behalf of a natural or legal person, crypto-assets from one distributed ledger address or account to another. Such service may be provided without virtual currency wallet opened for a CASP’s client.
Benefits of Obtaining a CASP License in Latvia
Access to a highly digitalized economy:
- Latvia is a leader in digital transformation, offering robust infrastructure for blockchain and crypto-asset businesses.
- High-speed internet and advanced e-government solutions make it easier to establish and manage operations.
Proximity to key European markets:
- Located in Northern Europe, Latvia serves as a strategic gateway to Scandinavian and Baltic markets.
- The country’s geographical location facilitates easier connections to major crypto hubs like Estonia and Lithuania.
Participation in Latvia’s fintech ecosystem:
- Businesses benefit from active participation in Latvia’s vibrant fintech ecosystem, which includes government-supported innovation hubs and accelerator programs.
- Networking opportunities with other fintech companies foster innovation and partnerships.
Supportive regulatory framework:
- Latvia’s regulatory bodies are known for being approachable and open to innovation, making the licensing process smoother for businesses.
- Authorities maintain ongoing communication with CASPs to ensure compliance without creating unnecessary barriers.
EU-wide passporting under MiCA:
- CASPs are able to offer services across the EU without additional licensing.
- This enables companies to expand into 27 EU countries seamlessly.
Access to innovation grants and EU funding:
- Companies licensed in Latvia can access innovation grants and EU funding opportunities for technological development.
- These resources can support research, product development, and expansion initiatives.
Our Services
STEP 1
Incorporation stage
- Company formation in Latvia
- Provision of a registered address for 1 year
- Opening corporate bank account and transferring the share capital
- Appointment and employment of a local director
- Detailed company structure documentation
STEP 2
Pre-licensing stage
- Preparation and submission legal and financial documents (non-exhaustive list) according to MiCA
- Review of existing policies and procedures, if the company already has them
STEP 3
Licensing stage
- CASP license application assistance
- Conducting communication with the Latvijas Banka during the license process
Our Experts in this Area
Step by Step Description
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Initial setup
- Initiating a preliminary project assessment
- Creating an action plan
- Preparation and filing of the package of documents
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Company registration
- Verification and reservation of the company name at the Register of Enterprises of the Republic of Latvia
- Facilitating the notarial process for the company's official registration
- Incorporating the company's data into the Register of Enterprises of the Republic of Latvia
- Obtaining the Certificate of incorporation from the Register of Enterprises of the Republic of Latvia, Memorandum and Articles of Association
- Registration for tax and social security purposes
- Opening a corporate bank account
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Obtaining a CASP license
- Preparation of documents according to MICA
- Submission an application to the licensing authority - Latvijas Banka
- Reviewing the application to ensure it is complete (if any documents or information are missing, the applicant will be notified and given a specific deadline to provide the necessary additional documentation)
- Assessment of the documents` content submitted (a detailed review to verify that all regulatory requirements are met)
- Requesting of additional details (if applicable)
- Notification of grant or refusal of the CASP license
- Granting or refusal notification to European Securities and Markets Authority (ESMA)
- Publication in ESMA register
National Legislation of Latvia
In Latvia, the transition period means that applicants may continue to provide services related to the provision of crypto-asset services until June 30, 2025
Regulation:
In Latvia, the primary legislation governing the implementation of the EU's MiCA Regulation is the Kriptoaktīvu pakalpojumu likums (Law on Crypto-asset Services / Law), which came into force on June 30, 2024. The goal of the Law is to foster the development of the crypto-asset sector and to define the legal basis for the functioning of the crypto-asset market in Latvia.
Licensing authority:
The Law designated Latvijas Banka, the central bank of Latvia, as the supervisory authority responsible for overseeing the crypto-asset sector within the country.
Latvijas Banka is authorised to define the requirements regulating the activities of the subjects of the Law and the procedure for compliance with these requirements in accordance with the decisions, instructions and recommendations of the EBA or the ESMA regarding the issuance, offering to the public or admission to trading in crypto-assets, as well as the provision of crypto-asset services.
Latvijas Banka specifies criteria according to which crypto-asset service providers providing crypto-asset advices ensure that individuals providing crypto-asset information or crypto-asset services on their behalf, including crypto-asset advices, have the necessary knowledge and competence in the relevant field.
Procedure, timelines, fees:
Following the full application of MiCA, i.e. after 30 December 2024, the Latvijas Banka must assess within 25 working days of receiving an application for authorisation whether all of the required information has been included in the application. At this stage, however, the Latvijas Banka will not assess the quality of the information provided. The Latvijas Banka may ask the applicant to supplement the application if some or all of the required information is missing. The Latvijas Banka will set a deadline for the submission of any missing information. After the submission of missing information, the Latvijas Banka will have 40 working days to make a qualitative assessment of the application. During this period, the Latvijas Banka has the opportunity to submit additional requests for clarification, but only the first of these requests will suspend the 40 working day assessment period, for a maximum of 20 working days.
Latvijas Banka also offers free pre-licensing consultations to assist CASPs in understanding regulatory requirements, ensuring document readiness, and assessing application viability. This initiative aims to streamline the licensing process and reduce service downtime post-regulation enforcement.
A person who is planning to provide crypto-asset services (if it is not a financial market participant the operation of which is supervised by Latvijas Banka) must apply to Latvijas Banka for obtaining the CASP authorisation and pay €2,500 for the examination of the application.
CASPs who have received the authorisation must pay Latvijas Banka up to 0.6% (inclusive) per year of the gross revenues related to the provision of crypto-asset services, but not less than € 3,000 per year.
Transition period:
A CASP who has commenced the provision of crypto-asset services until December 30, 2024 and whose operation is supervised by the State Revenue Service in accordance with Section 45, Paragraph two, Clause 6, Sub-clause "e" of the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing is entitled, until June 30, 2025, to continue the provision of crypto-asset services without obtaining the authorisation from Latvijas Banka. If such CASP, by June 30, 2025, applies to Latvijas Banka for obtaining the authorisation, it can continue the provision of crypto-asset services without the mentioned authorisation until Latvijas Banka has examined its application and taken the decision to issue the authorisation.
The State Revenue Service shall, upon request of Latvijas Banka, transfer the information at its disposal which has been obtained as a result of the implementation of the supervision function on those CASPs who, by June 30, 2025, have submitted to Latvijas Banka the application for obtaining the authorisation to provide crypto-asset services.
Requirements for Obtaining a CASP License in Latvia
Capital requirements for a CASP vary depending on what services the company will provide - from €50,000 to €150,000
Physical office requirements
A CASP shall have a registered office in Latvia where it carries out at least part of their crypto-asset services.
Requirements for key persons
-
Senior managers (directors):
- Number: MICA does not specify a minimum and maximum number of directors. However, MICA states (part 2, article 59) that there shall be at least several directors.
- Residency requirements: At least one director must be an EU resident.
- General requirements: Directories must have a solid reputation, necessary skills, and relevant experience.
- Required documents:
- a clean criminal record
- a detailed CV
- statements on time commitment and past professional conduct
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Shareholders:
- Number: MICA does not specify a minimum and maximum number of shareholders.
- Residency requirements: There is no restriction.
- General requirements: Shareholders must have a solid reputation, necessary skills, and relevant experience.
- Required documents:
- a clean criminal record
- an ownership structure chart
Capital requirements
Capital requirements vary depending on what services the company will provide:
Class 1: A CASP authorized for the following crypto-asset services:
- execution of orders on behalf of clients
- placing of crypto-assets
- providing transfer services for crypto-assets on behalf of clients
- reception and transmission of orders for crypto-assets on behalf of clients
- providing advice on crypto-assets and/or
- providing portfolio management on crypto-assets
Minimum capital requirements - €50,000.
Class 2: A CASP authorized for any crypto-asset services under Class 1 and:
- providing custody and administration of crypto-assets on behalf of clients
- exchange of crypto-assets for funds and/or
- exchange of crypto-assets for other crypto-assets
Minimum capital requirements - €125,000.
Class 3: A CASP authorized for any crypto-asset services under Class 2 and:
- operation of a trading platform for crypto-assets
Minimum capital requirements - €150,000.
Documentation requirements
There are list of documents that must be submitted with the application:
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Documents required for all CASPs:
- The articles of association of the applicant CASP
- Identity and proof of good repute, knowledge, skills, experience and of sufficient time commitment of the members of the management body
- Information relating to shareholders or members with qualifying holdings
- A program of operations setting out the types of crypto-asset services that the applicant CASP wishes to provide, including where and how these services are to be marketed
- A description of the applicant CASP’s prudential safeguards (insurance policy)
- A description of the applicant CASP’s governance arrangements and internal control mechanisms
- A description of the applicant CASP’s business continuity plan
- Detection and prevention of money laundering and terrorist financing (full packet of policies)
- Descriptions both in technical and non-technical language of applicant CASP’s IT systems and security arrangements
- A description of the applicant CASP’s procedures to handle complaints from clients
- Documents required in case CASP wishes to offer services in other countries:
- List of EU countries where the company wishes to offer its services
- Documents required for certain services (each of the 10 services requires its own documents):
- Custody and administration policy
- A description of the procedure for the segregation of client’s crypto-assets and fund
- The operating rules of the trading platform and market abuse detection
- Information on the exchange of crypto-assets for funds or other crypto-assets (commercial policy)
- The execution policy
- Information on the provision of advice or portfolio management on crypto-assets
- Information on transfer services
Taxes in Latvia
The CIT rate for companies is 20% on distributed profits
Corporate Income Tax (CIT)
Latvia imposes a 20% CIT on distributed profits and which applies to the gross amount, or 20/80 of the net cost, i.e., the taxable base of the CIT should be divided by a coefficient of 0.8.
Notably, undistributed or reinvested profits are exempt from CIT, encouraging businesses to reinvest earnings into their operations.
Capital Gains Tax (CGT)
Capital gains are taxed at a rate of 25.5%. This applies to profits from the sale of capital assets such as real estate, securities, and shares.
Similar to other income types, an additional 3% PIT is applied to the portion of total annual income exceeding €200,000, encompassing capital gains.
Crypto taxation: profits from cryptocurrency transactions are treated as capital gains and are subject to a 25.5% tax rate. Taxpayers are required to report these gains and pay the associated tax accordingly.
Personal Income Tax (PIT)
Latvia employs a progressive PIT system with the following rates:
- 25.5% on annual income up to €105,300
- 33% on annual income exceeding €105,300
An additional 3% PIT is levied on the portion of an individual's total annual income that exceeds €200,000. This surcharge applies to various income types, including employment income, capital gains, dividends, and other sources.
Frequently Asked Questions
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What is a CASP license in Latvia?A CASP license is a regulatory authorization required for companies providing cryptocurrency-related services such as exchanges, custodial services, advisory services, etc. in Latvia.
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Who issues the CASP license in Latvia?The Latvijas Banka issues CASP licenses.
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What services can be provided under a CASP license?
It allows services such as:
- 1) Providing custody and administration of crypto-assets on behalf of clients
- 2) Operation of a trading platform for crypto-assets
- 3) Exchange of crypto-assets for funds
- 4) Exchange of crypto-assets for other crypto-assets
- 5) Execution of orders for crypto-assets on behalf of clients
- 6) Placing of crypto-assets
- 7) Reception and transmission of orders for crypto-assets on behalf of clients
- 8) Providing advice on crypto-assets
- 9) Providing portfolio management on crypto-assets
- 10) Providing transfer services for crypto-assets on behalf of clients
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What are the key requirements to obtain a CASP license in Latvia?Companies must meet physical office requirements, requirements for managers and shareholders, minimum capital requirements, documentation requirements.
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Is it mandatory to have a physical office in Latvia to obtain a CASP license?Yes, a local office in Latvia is required for regulatory oversight.
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Is there a minimum capital requirement for obtaining a CASP license?Yes, applicants must meet specific financial and operational adequacy standards, but the exact minimum capital depends on the services offered (€50,000, €125,000, €150,000).
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What is the process for applying for a CASP license?The process involves submitting an application to the Latvijas Banka with detailed documentation on the company structure, management, AML policies, and financial plans, etc.
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How long does it take to obtain a CASP license?The preparation of documents and the review process typically takes several months, depending on the completeness of the application and the authority's workload.
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Can CASPs provide cross-border services in the EU?Yes, once licensed under MiCA, CASPs can offer services across the EU without needing separate licenses in other Member States.
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Why is a CASP license necessary in Latvia?A CASP license ensures compliance with Latvian and EU financial regulations under the MiCA Regulation, providing legal security and consumer protection.
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