Fintech companies ask for regulatory changes in Latvia

Five organizations representing the financial technologies sector in Latvia have sent a joint letter to the Finance Ministry and the Bank of Latvia (which is now the financial regulator), calling for legislative amendments "in order to adapt the best practices of the financial technologies markets from the neighbouring countries, and as a result, strengthen Latvia’s attractiveness in the eyes of new and innovative companies".

The letter has been signed by the Latvian Association for Blockchain Development, Fintech Latvia Association, the Latvian Association of Start-ups, the Latvian Association of Payment and Electronic Monetary Institutions, and the Latvian Association of Crowd Financing Service Providers.

"By joining forces with other associations in the financial technologies sector, we would like to change the dynamics in the Latvian financial sector. By making the changes decisively and in due time, the Bank of Latvia and the Finance Ministry would make a broad step towards positioning Latvia as a country that is friendly to financial technologies and attract financial service providers and start-ups from different European Union member states. It would ensure also bigger competition in the Latvian financial services market and provide a more attractive offer to customers,” said Martins Puke, a board member of the Latvian Association for Blockchain Development.


The organizations say they are calling on the decision makers to undertake three main steps:

  1. To ensure that financial technologies service providers may access international payment system SEPA directly through the Bank of Latvia.
  2. To ensure a possibility for the financial technologies service providers to open payment accounts at the Bank of Latvia.
  3. To adapt services that meet the EU crypto-asset market regulation.

“A number of financial technologies companies, including payment institutions and providers of crypto currency services, as well as indirectly those participants of the financial technologies sector who use payment institutions for making their payments, have such a necessity. The above-mentioned market participants may access the SEPA system, using services of commercial banks, but such a model of operations brings along different factors that hamper development.

"Even though those fintech companies who cooperate with banks are positive about their experience, it should be noted that not all commercial banks wish to specialize in cooperation with financial technologies companies, thus, the range of services available in Latvia is quite limited. Also, different commercial banks have different requirements for launching cooperation with financial technologies companies, and quite often even financial technologies companies with a license issued by the Bank of Latvia get rejected by commercial banks, therefore, access to SEPA through the Bank of Latvia would make these processes less time consuming and also more predictable,” said Tina Luse, the head of Fintech Latvia association.

Access to the SEPA system directly through the Bank of Latvia would make Latvia more attractive for financial technologies companies, it is argued by the signatories. The Lithuanian central bank has made a similar step, developing a CENTROlink system, helping Lithuania to become a financial technologies powerhouse. 

The thorny issue of crypto currencies is another area of concern. On April 20, 2023, the European Parliament adopted a regulation on the crypto-assets market (MiCA). MiCA has been developed with a goal to promote and support digital financial potential in the means of innovations and competition, at the same time, reducing risks. Among other things, MiCA will determine requirements for licensing and supervising the crypto-assets services providers. A license will be required for provision of different crypto-asset services in the European Union, for example, storage of crypto-assets, exchange of crypto assets for the country’s official currency or other crypto-assets. A crypto-asset service provider licensed in one European Union country will be entitled to provide crypto-asset services in all European Union member states.

Part 3 of Article 70 of MiCA regulation, as well as Article 82 of the Preamble of the MiCA regulation provide that crypto-asset service providers should have accounts in commercial banks or the central bank. These provisions should also meet the actual possibilities in Latvia to open such accounts at the Bank of Latvia, the letter to the central bank argues.

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