Inside Latvia's strategy to win the European crypto race

We attended Baltic Fintech Days 2026 in Riga to see firsthand how Latvia is becoming Europe's top destination for MiCA-licensed crypto companies.

While much of Europe’s digital asset industry has been focused on regulatory uncertainty, Latvia is trying to become one of the continent’s most attractive jurisdictions for regulated crypto businesses.

At Baltic Fintech Days 2026, conversations repeatedly returned to this one topic. Politicians, regulators, founders, and investors all pointed to the same trend: a growing number of international crypto companies are choosing Latvia as their entry point into the European market, and the numbers back up that narrative.

While the country had officially issued three MiCA licences by May 2026, including a landmark dual authorisation for crypto platform Paybis, there is more to the story. According to data shared during the event, 44 crypto companies are currently somewhere in Latvia’s licensing pipeline, with 15 in active licensing procedures and another 29 engaged in pre-licensing consultations.

For a country with fewer than two million inhabitants, that level of interest raises an obvious question: what is attracting crypto companies to Latvia?

From consultation to authorisation

One of Latvia’s most frequently cited advantages is its willingness to engage with companies before they formally apply for licences. Unlike in some jurisdictions where firms can spend months preparing applications only to discover major deficiencies after submission, Latvian authorities have invested heavily in pre-licensing consultations.

Anyone who has navigated financial regulation knows that uncertainty can be expensive, meaning that a delayed response from a regulator can stall product launches, fundraising rounds, hiring plans, and market entry strategies.

This generally consists of three stages. The consultation phase allows prospective applicants to discuss business models and regulatory expectations before formal preparations begin. It is then followed by a pre-licensing stage, where draft documentation, governance arrangements, and compliance frameworks are reviewed before submission. Only after these discussions does the formal licensing assessment begin. According to Sofian Berrahal, CEO of Nexpay, this structure helps reduce the risk of delays caused by incomplete or misaligned applications.

The government institutions and the central bank, firms can access consultations designed to clarify regulatory expectations, assess business models, and prepare documentation in advance. For founders attending Baltic Fintech Days, this seemed to be one of Latvia’s strongest advantages, since they value this process built around dialogue, where they can discuss challenges directly with supervisors and receive practical feedback before entering the formal assessment stage.

As crypto regulation becomes increasingly complex under MiCA, accessibility may prove more valuable than speed alone. For many founders, the value lies not simply in obtaining answers quickly but in receiving clear guidance about what is and is not possible under the regulatory framework.

Competing on cost and flexibility

Another factor attracting attention is Latvia’s comparatively low supervisory fee structure. The country’s application examination fee stands at EUR 2,500, while ongoing supervisory fees are capped at 0.6% of gross revenue, with a minimum annual charge of EUR 3,000.

Moreover, Latvia's licensing framework also follows MiCA's tiered capital structure. Depending on the services provided, crypto firms must maintain minimum capital ranging from EUR 50,000 for advisory and execution services, to EUR 125,000 for custody and exchange activities, and EUR 150,000 for the operation of a crypto-asset trading platform. For rapidly growing crypto firms, the difference can become significant as revenues scale. Viktors Valainis, Minister of Economics of Latvia, emphasises that competitiveness is measured not only by the licensing speed, but by the entire cost of operating under supervision, including ongoing maintenance and regulatory interactions after authorisation has been granted.

Latvia has also introduced several measures that stand out within the European Union. As discussed with Kriss Pujats, Co-Founder and CTO at Gravity, one of the most interesting ones is the possibility of contributing crypto assets as company share capital, creating additional flexibility for crypto-native entrepreneurs establishing businesses in the country.

The practical implementation often involves regulated intermediaries converting crypto assets into forms suitable for corporate capitalisation while ensuring compliance with applicable regulations.

Moreover, there is also the possibility of paying taxes using crypto assets. Legally, the framework is possible, although the infrastructure required to support such payments remains under development. The envisioned model sees taxpayers transferring crypto assets to licensed intermediaries, which would convert the assets into EUR before settlement with the state. This way, the government would continue receiving tax revenues in fiat currency, while businesses would gain additional flexibility in how they manage digital assets.

Whether such systems become operational at scale remains to be seen, but the discussion highlights the degree to which crypto policy has entered mainstream political debate in Latvia.

Why Paybis matters

Perhaps the most distinctive element of Latvia’s emerging crypto proposition is its focus on combining crypto and traditional financial regulation.

The Paybis approval demonstrates this strategy in practice. By obtaining both MiCA and PSD2 authorisation, the company can offer regulated crypto services while also accessing traditional payment infrastructure under a single regulatory umbrella.

As Konstantins Vasilenko, CBDO and co-founder Paybis, explains, ‘holding both the CASP and the Payment Institution licence simultaneously is significant because it means we are not just a crypto company that got regulated: we are a licensed payment institution that also handles crypto. That distinction matters enormously for our B2B partners and for the 7 million users who trust us with their transactions. Under MiCA alone, we can operate as a crypto asset service provider across the EU. Under PSD2, we carry the consumer protections and operational standards of a traditional payment institution. Together, they give our users and partners something most platforms in this space still cannot offer: a single, fully regulated infrastructure that sits at the intersection of crypto and traditional finance, with no regulatory gaps between them’.

As stablecoins, tokenised assets, and crypto payments become increasingly integrated into the financial system, many industry participants believe dual-authorisation models will become strategically important across Europe.

Trust as a strategic asset

However, Latvia’s strategy is not solely focused on attracting companies through convenience. Perhaps the most interesting aspect of Latvia’s strategy is that it is not positioning itself as a lightly regulated jurisdiction. Throughout Baltic Fintech Days, government officials and industry stakeholders repeatedly emphasised the importance of international credibility.

They see regulatory reputation as a long-term competitive advantage. The country’s focus on achieving strong MONEYVAL ratings reflects a belief that high-quality supervision ultimately creates more valuable licences. This emphasis on credibility is particularly relevant in the post-MiCA environment. As Sofian Berrahal mentioned, for institutional investors, venture capital firms, and banking partners, regulatory reputation can be just as important as regulatory efficiency. A licence issued within a jurisdiction recognised for strong AML controls may facilitate access to banking relationships and support expansion across international markets.

Even if it might seem inconvenient, in the long run, a jurisdiction known for rigorous oversight can open doors that a weaker regulatory reputation cannot.

Political consensus as a growth driver

Finally, perhaps the most striking aspect of Latvia's crypto strategy is the level of political consensus behind it. At Baltic Fintech Days, Valainis presented fintech and crypto as part of a broader national effort to attract investment, create highly skilled jobs, and position Latvia as a hub for future-oriented industries.

The argument resonates particularly strongly in a country seeking to develop high-value industries, attract international investment, and create highly skilled jobs. The minister also highlighted the government's large-investment framework, chaired by the Prime Minister, which is designed to provide tailored support for major international companies entering Latvia. According to the Minister of Economics, this approach allows public institutions to coordinate around issues such as regulation, talent development, university cooperation, and long-term expansion plans.

Recent public discussions involving major political parties have shown broad support for initiatives including tokenisation, real-world assets (RWAs), and crypto-friendly innovation policies. Moreover, according to the Co-founder and CTO of Gravity, interest in Latvia is already coming from Poland, the UK, Germany, Turkey, the UAE, Australia, Canada, and the US. Some are established operators seeking a MiCA-compliant European base, others are startups looking for a jurisdiction where regulatory engagement is more accessible.

This level of political alignment remains relatively uncommon across Europe and provides an additional layer of certainty for businesses considering long-term investments.

Conclusions

While regulation has become the focal point of Latvia's crypto proposition, market participants also point to the country's broader financial infrastructure. One example is the Electronic Clearing System (EKS), which allows eligible payment institutions to participate directly in SEPA payment processing. Combined with real-time payee verification tools and growing fintech infrastructure, these capabilities can reduce reliance on intermediary banking relationships and support more efficient crypto-fiat operations.

However, some questions remain. Can regulators maintain responsiveness as application volumes increase? Can the country convert licensing activity into a broader ecosystem of talent, investment, and innovation? Can it balance growth with the compliance standards expected under MiCA?

As the answers are still to be found, Baltic Fintech Days demonstrated that Latvia is, for sure, not a peripheral player in Europe’s crypto conversation. In the early stages of the MiCA era, the country has emerged as one of the jurisdictions most actively competing for the next generation of crypto businesses.

And if current trends continue, Latvia may become an important gateway into Europe’s regulated digital asset market.

About Claudia Pincovski

Claudia is a News Lead Editor at The Paypers. Holding a bachelor’s degree in Journalism, she is very passionate about exploring the latest news on financial inclusion, financial literacy, digital banking, and Open Finance. Claudia is a diligent researcher, a meticulous editor, and an active advocate for diversity and inclusion.