To apply for a CASP (Crypto Asset Service Provider) license under the Latvian MiCA framework first a limited liability company (SIA) has to be established in Latvia. The minimum share capital required depends on the scope of activities.
Most CASPs providing crypto exchange and/or wallet services fall under MiCA CASP Class 2 (€125,000) or Class 3 (€150,000). Further, the capital amount may be required to be increased by the regulator in the future, dependent on the operational costs of the CASP. Per prudential requirements, the capitalization should be at least one-quarter of the fixed overheads of the preceding year. The share capital must be fully paid in monetary form. The company formation process can typically be carried out remotely, with no need to visit Latvia, and is completed within 10 business days after we receive all necessary documentation. Our service begins with analyzing the business model and corporate structure to identify the appropriate license class and determine the exact requirements for capital and documentation.
From the regulatory perspective, the CASP licensing process begins with a familiarisation stage, during which the regulator consults with the applicant about their planned activities. The Latvian CASP license applicant must provide details on shareholders, initial capital, the business model, services offered, transaction flows, technical solutions, and customers, while also drafting required documents. The regulator provides advisory on regulations and determines the feasibility of proceeding with licensing. Key documents include CVs of shareholders and officials, the origin of initial capital, and service descriptions.
The license applicant also has to comply with the local substance requirements such as on-site physical office, Latvian resident management board member(s) and local resident AML compliance staff (e.g. MLRO), whom also have specific professional experience and fit-and-proper requirements. We can provide on-going support with local substance (e.g. physical office setup) and AML compliance personnel sourcing such as professional background Latvian resident MLRO and CCO roles to take care of reporting and to meet the regulatory requirements.
Once licensed, a CASP must maintain a comprehensive framework for Know Your Customer (KYC) and Know Your Transactions (KYT) processes, ensuring full compliance with Latvian and EU regulations. The Latvian regulator oversees all CASPs and may audit the company’s adherence to AML policies, request detailed reports on transactions, and evaluate compliance processes. The regulator may also conduct on-site visits to the company’s local office to monitor operations and interview personnel. Our legal team is available to provide ongoing guidance, tailored to your specific needs, to ensure compliance with MiCA and AML requirements.
Latvia, one of the three Baltic States, is strategically positioned between Lithuania and Estonia, both well-known crypto licensing jurisdictions. Until the end of 2024, Latvia was not particularly recognized for its crypto licensing framework. However, with the adoption of the MiCA legislation, the local regulator Latvijas Banka has actively promoted Latvia as a competitive jurisdiction for crypto-asset service providers (CASPs).