Manimama's experts are well versed in the complexities of cryptocurrency regulation and are committed to sharing their findings with businesses and individuals navigating this dynamic sector.
Indeed, our legal team recently finalized a comprehensive study on the national implementation of the Markets in Crypto-assets Regulation (MiCA) in various EU countries. The legal research not only highlights the differences in how MiCA is adopted at the national level, but also offers standard rules for compliance. Today we offer you an insight into the specifics of obtaining a cryptocurrency license in Latvia under the new MiCA provisions.
Current requirements (prior to MiCA implementation)
In Latvia, there is no special regulatory framework for organizing business in the field of crypto-assets. In addition, there is no requirement or prohibition to obtain a crypto license.
VASPs are LPMLTPF subjects, which means they have:
– register in SRS as an LPMLTPF subject, including appointing a responsible person;
– conduct and document the assessment of money laundering, terrorist financing and proliferation risks;
– create a system of internal control;
– report unusual and suspicious operations.
Has the jurisdiction enacted a law/draft law implementing MiCA?
Draft Bill Kriptoaktīvu pakalpojumu likums
Who is the regulator under the law/draft law implementing MiCA?
Latvijas Banka
Requirements for future CASPs stipulated by the national legislation implementing MiCA, the presence of national peculiarities
Meets the requirements set forth in MiCAR.
CASP must apply for authorization to the Bank of Latvia and pay a processing fee of EUR 2,500.
An authorized CASP pays the Bank of Latvia EUR 5,000 per year upon approval, plus up to EUR 1.4 interest (inclusive) per year on gross revenue.
The period of time by which the CASP must comply with the new requirements, as well as the procedure for notifying the regulator of compliance with the new requirements
The Bank of Latvia plans to start the licensing process and accept applications on January 1, 2025. CASP has until June 30, 2025 to apply for a permit.
Is there a transition period before the full implementation of MiCA?
The Law enters into force on June 30, 2024, the requirements of the Law will begin to apply from December 30, 2024. CASPs, which started providing services before December 30, 2024, have the right to continue providing cryptoasset services until June 30, 2025 without obtaining a permit from the Bank of Latvia.
If CASP applies to the Bank of Latvia for a permit to provide cryptoasset services by June 30, 2025, it has the right to continue providing cryptoasset services without the aforementioned permit until the Bank of Latvia considers its application and makes a decision on issuing a permit.
The ability of a CASP from a jurisdiction with a transition period to operate freely in a jurisdiction without a transition period starting from January 1, 2025.
The relevant provisions have not yet been adopted
Liability provided for CASPs that continue to operate at the place of registration without meeting the new requirements
A fine of up to 5,000,000 euros or three percent of the total turnover of the previous accounting year according to the approved annual report for the previous accounting year or up to twice the amount of the income obtained as a result of the violation or possible preventive damage.
The regulatory body also has the right to apply other administrative measures separately or in addition to the sanctions provided by the Law.
Other useful information regarding the implementation of MiCA
After the discussion of the draft law, the document “Objections and suggestions of the public”, was issued, in which the Ministry of Finance noted the following regarding the requirements and procedure for obtaining a permit:
“…The European Securities and Markets Authority, in close cooperation with the European Banking Authority, will develop draft implementing technical standards to define standard forms, templates and procedures for the information to be included in the application for authorization of a crypto-asset service provider. The specified technical standards and implementation standards will be applied directly, and it is not intended to issue regulatory acts of the supervisory authority for their implementation.”
“As soon as the Bank of Latvia is designated as the competent institution of Regulation No. 2023/1114, it will create a licensing guide for obtaining a work permit for cryptocurrency asset service providers. The guide will be available on the Bank of Latvia website in the licensing section.”
Currently, an explanation is available on the website of the Bank of Latvia regarding the preparation of documents required for obtaining a license, registration or permission to operate (the Bank of Latvia refers to this document), but the document contains general provisions.
Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.
