Financial and Capital Market Commission (FCMK) – responsible for supervising banking, insurance, and securities/markets sectors in Latvia.

Address: Kungu iela 1, Riga 1050, Latvia

The FCMK operates under the Latvian Financial and Capital Market Act (FCM Act), which outlines its mandate to ensure market stability and protect investors.

International standing: Latvia participates as an Observer in the EU Digital Finance Platform's Cross-Border Testing, indicating alignment with European regulatory standards such as those set by the Financial Action Task Force (FATF) and MONEYVAL.

Securities in domestic capital markets | Securities in domestic capital markets | State Treasury of Latvia

Financial and Capital Market Commission | EU Digital Finance Platform

Crypto-assets that qualify as financial instruments under EU law are subject to the full suite of EU financial services legislation in Latvia, including MiFID II, the Prospectus Regulation, and the DLT Pilot Regime. L_2022151EN.01000101.xml

The regulatory framework is primarily EU-derived, with the Financial and Capital Market Commission (FKTK) as the competent Latvian authority, though specific local licensing details are implemented through EU directives transposed into national law. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

Licensing for entities dealing in crypto-assets that qualify as financial instruments follows the MiFID II authorisation regime for investment firms, with no separate national cryptocurrency-specific license regime identified. REGULATIONS - EUR-Lex - European Union

The DLT Pilot Regime provides an optional framework for DLT market infrastructures to obtain specific permissions to operate trading and settlement systems for tokenised financial instruments. L_2022151EN.01000101.xml

The practical reality is that crypto-assets not qualifying as financial instruments fall outside traditional securities regulation, while those that do qualify face the full EU regulatory regime with no entity having obtained a DLT Pilot Regime permission in Latvia. L_2022151EN.01000101.xml

Regulatory Bodies: The competent authorities for credit institutions and investment firms in Latvia operate under the framework of Directive 2013/36/EU, which sets out the prudential supervision rules applicable across EU Member States, including Latvia. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

Primary Laws: Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, is the key EU-level law governing credit institutions. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions was an earlier codification, now superseded by Directive 2013/36/EU which repealed Directives 2006/48/EC and 2006/49/EC. EUR-Lex - 32000L0012 - EN

Regulation (EU) 2022/858 of the European Parliament and of the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology provides the framework for DLT market infrastructures dealing with crypto-assets that qualify as financial instruments. L_2022151EN.01000101.xml

Regulation (EU) 2023/1114 of 31 May 2023 (MiCA) was incorporated as an amendment to Directive 2013/36/EU, indicating the EU-level response to crypto-assets. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

International Standing: Latvia joined the EU on 1 May 2004 following the Treaty of Accession, and as an EU Member State it is subject to all EU financial services legislation, including FATF standards implemented through EU AML directives. Latvia | EUR-Lex

Latvia is required to comply with the acquis communautaire, including all financial services legislation, as part of its EU membership obligations. Latvia | EUR-Lex

The EUR-Lex summary for Latvia indicates that the country's legislation was broadly in line with the EU acquis as of the accession period, and this alignment continues through ongoing transposition of EU directives. Latvia | EUR-Lex

Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments (MiFIR) applies to crypto-assets qualifying as financial instruments, as amended by Regulation (EU) 2022/858. L_2022151EN.01000101.xml

Directive 2014/65/EU (MiFID II) defines what constitutes a financial instrument, and crypto-assets qualifying as financial instruments under this directive are subject to the full regulatory framework. L_2022151EN.01000101.xml

Regulation (EU) 2017/1129 (the Prospectus Regulation) applies to issuers of crypto-assets that qualify as financial instruments. L_2022151EN.01000101.xml

Regulation (EU) 2019/2033 on the prudential requirements of investment firms applies to investment firms operating in Latvia that deal in crypto-assets qualifying as financial instruments. REGULATIONS - EUR-Lex - European Union

The ESMA guidelines on the application of the definition of financial instruments establish the criteria for determining whether crypto-assets qualify as financial instruments. C_2010154EN.01000601.xml)

Who Needs a License: Any entity operating a DLT market infrastructure, including a DLT multilateral trading facility (DLT MTF), DLT settlement system (DLT SS), or DLT trading and settlement system (DLT TSS), must be authorised as an investment firm or market operator under Directive 2014/65/EU and receive a specific permission under Regulation (EU) 2022/858. L_2022151EN.01000101.xml

DLT MTF Operators: A DLT MTF must be operated by an investment firm or a market operator authorised under Directive 2014/65/EU that has received a specific permission under Regulation (EU) 2022/858. L_2022151EN.01000101.xml

Credit Institutions as DLT MTF Operators: A credit institution authorised under Directive 2013/36/EU that provides investment services or performs investment activities may only operate a DLT MTF when authorised as an investment firm or market operator under Directive 2014/65/EU. L_2022151EN.01000101.xml

Capital Requirements: The capital requirements for entities dealing in crypto-assets that qualify as financial instruments follow the framework set out in Directive 2013/36/EU for credit institutions and Regulation (EU) 2019/2033 for investment firms. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

Application Process: An entity not already authorised under Regulation (EU) No 909/2014 or Directive 2014/65/EU may apply for authorisation under those instruments simultaneously with applying for a specific permission under Regulation (EU) 2022/858. L_2022151EN.01000101.xml

Application Assessment: When assessing an application for a specific permission, the competent authority should not assess whether the entity fulfils the requirements of Regulation (EU) No 909/2014 or Directive 2014/65/EU in respect of which an exemption has been requested under Regulation (EU) 2022/858. L_2022151EN.01000101.xml

Authorisation Revocation: Entities that apply for authorisation under the DLT Pilot Regime should only be able to operate DLT market infrastructures in accordance with the Regulation, and their authorisation should be revoked once their specific permission has expired, unless they submit a complete request for authorisation under Regulation (EU) No 909/2014 or Directive 2014/65/EU. L_2022151EN.01000101.xml

DLT Financial Instruments: DLT market infrastructures should only admit to trading or record DLT financial instruments on a distributed ledger, which are crypto-assets that qualify as financial instruments and are issued, transferred and stored on a distributed ledger. L_2022151EN.01000101.xml

Structural Requirements: DLT market infrastructures and their operators must have in place adequate safeguards related to the use of distributed ledger technology to ensure effective protection of investors, including clearly defined chains of liability to clients for any losses due to operational failures. L_2022151EN.01000101.xml

Technology Neutrality: The framework is designed to be technology-neutral, with operators of DLT market infrastructures required to ensure compliance with all applicable requirements irrespective of the technology used. L_2022151EN.01000101.xml

Licensed Entities: No entity has been licensed under the DLT Pilot Regime in Latvia, nor is there information about any Latvian entity obtaining a specific permission. The number of DLT market infrastructures authorised in the EU remains minimal, as noted in the recitals of Regulation (EU) 2022/858, which state that few projects are already in operation and those that are in operation are of limited scale. L_2022151EN.01000101.xml

Exemptions: DLT market infrastructures may be temporarily exempted from some specific requirements of Union financial services legislation that could otherwise prevent operators from developing solutions for trading and settlement of transactions in crypto-assets that qualify as financial instruments, without weakening any existing requirements or safeguards applied to traditional market infrastructures. L_2022151EN.01000101.xml

Access to Pilot Regime: Access to the pilot regime is not limited to incumbents but is also open to new entrants, consistent with the principle that the status as DLT market infrastructure should be optional. L_2022151EN.01000101.xml

Latvian Exemptions: Directive 2013/36/EU lists specific entities exempted from its scope, including in Latvia the 'krājaizdevu sabiedrības' (credit unions), which are cooperative undertakings recognised under the 'krājaizdevu sabiedrību likums' rendering financial services solely to their members. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

The AML/KYC framework for crypto-assets in Latvia is governed by EU anti-money laundering directives, including Directive (EU) 2018/843 (AMLD5), which was incorporated as an amendment to Directive 2013/36/EU. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

Customer due diligence (CDD) requirements apply to credit institutions and investment firms operating in Latvia under the EU AML framework, as the Directive 2013/36/EU provisions on the subject matter include prudential supervision consistent with Regulation (EU) No 575/2013. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

The EU legal framework requires institutions to have robust internal controls for AML compliance, as part of the prudential supervision framework established under Directive 2013/36/EU. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

The concept of "close links" in Directive 2000/12/EC, which established minimum criteria for supervisory oversight, remains relevant for understanding the relationships that regulated entities must disclose, including in the crypto-asset context. EUR-Lex - 32000L0012 - EN

Beneficial ownership transparency is part of the EU AML framework, and the Directive (EU) 2018/843 specifically addressed transparency requirements for financial entities. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

Detailed AML/KYC requirements for crypto-asset service providers in Latvia are not specified, and the focus remains on the securities regulatory framework rather than AML implementation details. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

No specific enforcement actions, penalties, fines, arrests, or cases involving crypto-asset or digital asset securities in Latvia have been reported. L_2022151EN.01000101.xml

The EUR-Lex Latvia country summary is archived and focuses on the EU accession period, containing no enforcement cases related to digital assets. Latvia | EUR-Lex

No enforcement data is available regarding the Financial and Capital Market Commission (FKTK) or any other Latvian authority taking action against unlicensed crypto-asset businesses. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

No guidance on the tax treatment of cryptocurrency or digital asset securities in Latvia has been published. L_2022151EN.01000101.xml

No information regarding income tax, capital gains tax, or VAT treatment of crypto-assets in Latvia has been issued. EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

The EUR-Lex documents focus exclusively on the regulatory and prudential supervision framework, not on tax matters. Latvia | EUR-Lex

No tax guidance has been issued for virtual assets. REGULATIONS - EUR-Lex - European Union

Definitional Uncertainty: The classification of crypto-assets as financial instruments depends on whether they fall within the definition under Directive 2014/65/EU, creating uncertainty for market participants about which regulatory regime applies to their activities. L_2022151EN.01000101.xml

Regulatory Gaps: The recitals of Regulation (EU) 2022/858 acknowledge that most crypto-assets are not covered by Union financial services legislation, creating challenges in terms of investor protection, market integrity, energy consumption and financial stability. L_2022151EN.01000101.xml

Lack of Authorised DLT Infrastructures: At the time of Regulation (EU) 2022/858's adoption, there was a lack of authorised financial market infrastructures using distributed ledger technology to provide trading or settlement services for crypto-assets that qualify as financial instruments, and few projects were in operation. L_2022151EN.01000101.xml

Technological Risks: The underlying technology of crypto-assets could raise novel forms of risk not adequately addressed by existing rules, including transparency, reliability, and safety requirements for protocols and 'smart contracts'. L_2022151EN.01000101.xml

Interoperability Issues: The use of distributed ledger technology would entail similar challenges to those faced by conventional technology, such as fragmentation and interoperability issues, and would potentially also create new issues, for instance in relation to the legal validity of tokens. L_2022151EN.01000101.xml

Direct Retail Access: The DLT Pilot Regime notes that platforms for trading crypto-assets usually give direct access to retail investors, whereas traditional trading venues usually give access to retail investors only through financial intermediaries, creating a risk that the current regulatory framework does not fully address. L_2022151EN.01000101.xml

Regulatory Arbitrage: There is a risk of regulatory arbitrage and loopholes if crypto-assets that qualify as financial instruments are not properly captured by the existing framework, which is why the DLT Pilot Regime was created to test solutions while maintaining a level playing field. L_2022151EN.01000101.xml

Limited Experience: Given the limited experience as regards the trading of crypto-assets that qualify as financial instruments and related post-trading services, it is premature to significantly modify Union financial services legislation to enable the full deployment of such crypto-assets. L_2022151EN.01000101.xml

No National Tailoring Evidence: No Latvia-specific implementing legislation for the DLT Pilot Regime or the MiCA regulation has been demonstrated, suggesting a reliance on direct EU regulation, which may create implementation gaps at the national level. L_2022151EN.01000101.xml

EUR-Lex - 02013L0036-20260711 - EN - EUR-Lex

REGULATIONS - EUR-Lex - European Union

REGULATION (EU) No 600/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

L_2017168EN.01001201.xml - EUR-Lex - European Union

52019DC0349 - EN - EUR-Lex - European Union