The Bank of Latvia is designated as the local crypto-asset market supervisory authority

On Tuesday, the government supported the establishment of a legal framework for the operation of the crypto-assets market in Latvia in relation to persons involved in the emission, public offering and admission to trade of crypto-assets or provide crypto-asset services, promoting the development of the field of crypto-assets in Latvia.

According to the Ministry of Finance (FM), in December 2019, the European Commission and the Council of the European Union announced their intention to introduce a regulation that would regulate crypto-assets, including “stable crypto-coins”, which are a relatively new subset of crypto-assets. Crypto assets, on the other hand, are one of the main applications of blockchain technology in the financial field.

On the other hand, on June 29, 2023, a regulation entered into force in the European Union, the scope of which includes natural and legal entities that provide crypto-asset services in the European Union.

The draft law developed by the Ministry of Finance will be applied to persons who are involved in the issuance, public offering and admission to trade of crypto-assets in Latvia or provide crypto-asset services, i.e. subjects of the law.

It is determined that the Bank of Latvia will be the competent supervisory authority for the crypto-asset market.

The Bank of Latvia will have the right to determine the content and submission procedure of the activity report and other information to be provided to the subjects of the law.

Also, the Bank of Latvia will be able to determine the criteria that cryptoasset service providers use to ensure that, on their behalf, clients are provided with advice or information about cryptoassets by natural persons who have the necessary knowledge and competence in the relevant field.

Crypto asset market service providers will be obliged to immediately inform the Bank of Latvia of all significant changes, including all circumstances that may negatively affect their future operations.

Also, the Bank of Latvia will have to be informed of changes in the information submitted in order to receive permission to issue, publicly offer or allow trading of crypto-assets or to provide crypto-asset services.

At the same time, the provider of crypto-asset services will have the right to open an account with the Bank of Latvia, in compliance with the bank account servicing conditions provided for in the account servicing agreement, which the provider of crypto-asset services concludes with the Bank of Latvia.

The law stipulates that a person who plans to provide crypto-asset services will submit an application to the Bank of Latvia for permission to provide crypto-asset services and will pay 2,500 euros for processing the application.

It is also stipulated that a person who plans to publicly offer an asset-linked token or request its permission for trading shall submit an application to the Bank of Latvia for permission to publicly offer or allow for trading asset-linked tokens and will pay 2,500 euros for the examination of the application.

On the other hand, a financial market participant whose activity is monitored by the Bank of Latvia, including an issuer that has received permission to publicly offer or allow for trading an asset-linked token, will have to submit to the Bank of Latvia an application for permission to publicly offer or allow for trading each other asset-linked token and will pay 1,250 euros for the examination of the application , but the total fee to the Bank of Latvia will not exceed EUR 5,000 per year.

A provider of crypto-asset services that has received a permit to provide crypto-asset services in accordance with the regulation on crypto-asset markets shall, after receiving the permit, pay the Bank of Latvia EUR 5,000 per year and additionally up to 1.4% per year of the gross revenues related to the provision of crypto-asset services.

At the same time, the draft law stipulates that the Bank of Latvia will be entitled to apply sanctions and administrative measures if it finds that various requirements are not being met, including regarding the issue of tokens tied to assets, public offering or admission to trade, as well as obtaining a permit to perform the mentioned activities.