Central Bank of Latvia fast-tracks EU MiCA licence attainment

The Central Bank of Latvia’s initiative, as part of which it developed licensing and pre-licensing procedures, intends to offer support for participants in the financial sector, enabling them to innovate and advance their capabilities and operations. Latvijas Banka is set to start accepting applications and issuing operating permits as of January 2025, when the MiCA licence is set to become effective.

Latvijas Banka’s support for financial services providers

Through the pre-licensing process, Latvijas Banka aims to provide individual consultations with its experts and deliver guidance on the viability of applications, regulatory compliance, and documentation. This focuses on minimising a service’s time-to-market and decreasing downtime after the regulation is passed. Before this, Latvijas Banka provided similar pre-licensing consultations in other verticals, enabling companies to lower their time to secure a licence to three months. Additionally, these initiatives highlight the decade-long modernisation effort of Latvia’s financial sector, which resulted in the creation of an advanced AML regime and a focus on assisting participants in the industry.

Furthermore, besides a team of consultants, an EU-wide licence, and a 0.6% supervision fee, Latvia aims to equip fintech companies with capabilities that could simplify their operations. Among them, the Central Bank mentions a regulatory sandbox, where solutions can be tested taking into account existing regulations, an innovation hub, where firms can apply for free advice from the financial institution regarding legislation, regulation, licensing, IT security, and AML, as well as startup support. For the latter, through the country’s startup law, companies can benefit from several assistance mechanisms, including the Startup Visa for foreign founders, minimised social tax rates, waived income tax, and 45% salary co-financing for highly qualified employees.

Representatives from Latvijas Banka commented on the announcement, mentioning that Latvia has a regulatory landscape that both aligns with EU standards and is open to advancement. The Central Bank developed a framework that intends to balance flexibility with responsibility, with its efforts being centred on simplifying licensing processes and minimising barriers to entry.