Why FinTech Companies Are Choosing Latvia for MiCA, EMI, Payment Institution and Neobank Licensing in 2026

While larger nations grapple with administrative bottlenecks and linguistic barriers, Latvia has positioned itself as one of the most efficient and cost-effective gateways to the European market. By providing a lower initial capital threshold than traditional banking jurisdictions, it facilitates the rapid entry of neobanks and digital-first financial services.

Latvia’s government-approved Fintech Strategy sets out an ambitious national commitment: to increase the number of fintech companies in Latvia by one third, create new jobs in the sector, attract investment, and establish Latvia as a competitive European fintech hub. This is not a declaratory goal — it is backed by concrete steps already in place: a new specialised credit institution licence introduced in January 2026, direct SEPA infrastructure access for non-bank payment providers, and a licensing pipeline that currently holds 44 active applications.

The primary strategic benefit remains EU-wide passporting: a single authorization from Latvijas Banka permits a firm to offer its services across all 30 European Economic Area (EEA) states under the cross-border notification regime.

The “Unbeatable” Price Tag of Entry

In the competitive landscape of European regulation, Latvia offers what is effectively the most accessible entry point for Crypto-Asset Service Providers (CASPs) under the MiCA framework.

• Examination Fee: The application fee for a CASP is set at just €2,500 — the lowest in the entire European Union.
• Supervision Fee: The annual ongoing supervision fee is structured at 0.6% of gross revenue, with a minimum floor of €3,000.
• Minimum Share Capital: The entry capital requirement is tiered based on service complexity. Class 2 and Class 3 licences represent the operational “sweet spots” for neobanks and high-growth exchanges, as they include key revenue drivers such as custody and trading infrastructure:
  • Class 1 (€50,000 minimum): Crypto-asset advice, portfolio management, reception and transmission of orders, execution of orders, placing, and transfer services.
  • Class 2 (€125,000 minimum): Custody and administration of crypto-assets, exchange of crypto-assets for funds, and exchange of crypto-assets for other crypto-assets.
  • Class 3 (€150,000 minimum): Operation of a crypto-asset trading platform.

Beyond Crypto – The Specialized “Neobank” Licence

Latvia is also transforming traditional banking through its Credit Institution Law. Since January 2026, the law now includes the possibility of obtaining a specialised credit institution licence with a lower initial capital threshold of €1M (compared to €5M for standard banking licences). This positions Latvia as a strong hub for neobanks and digital-first financial institutions that require regulated banking status without the capital burden of legacy banking models. Several financial companies have already expressed interest in this new licence category.

Speed, Efficiency, and a Pipeline That Proves It

In the fast-moving digital asset sector, regulatory delays can significantly impact time to market. Latvia’s structured licensing process is designed to reduce friction through a collaborative approach with the regulator — and the results are measurable.

Currently, Latvijas Banka has 15 companies in the active licensing stage and 29 companies in the pre-licensing consultation stage — over 40 live projects in the pipeline simultaneously.

International interest is broad and growing. Companies from Poland, Spain, Germany, Turkey, Canada, and the United Kingdom, among others, have sought licences for crypto-asset service provision in Latvia — a clear indicator of the country’s rising profile as a regulated entry point into the EEA digital asset market.

The structured process itself includes three stages:

• Consultation Stage: Applicants access free, unlimited consultations. Latvijas Banka allows document submission in English during this stage to streamline feedback.
• Pre-licensing Stage: A qualitative assessment of the business model, governance, and operational readiness. The regulator offers approximately 100 free pre-licensing consultations per year to identify potential issues early.
• Official Licensing Stage: A 25-working-day completeness check followed by a 40-working-day qualitative assessment.

In well-prepared cases, the full authorization process can be completed within approximately 60–90 days from final submission, while the overall end-to-end process typically takes 3 to 6 months.

“The goal is to create a structured and efficient licensing process that helps prepare companies for the requirements set for a regulated financial market participant and facilitates the smooth receipt of authorisations.”

— Santa Purgaile, Deputy Governor of Latvijas Banka

Operational Requirements & Communication in English

While Latvia facilitates early-stage communication in English, final submission documents must be provided in Latvian. Virtual offices are not permitted, and firms must maintain a tangible operational presence within the jurisdiction.

Key requirements include:

• Physical office in Latvia where crypto-asset services are actively managed
• Board structure of 2–3 directors (“at least several“), with at least one EU-resident director (a Latvian resident director is considered advantageous)
• Appointment of a dedicated AML officer with appropriate KYC/KYT systems
• Full operational documentation, including business plan, IT security framework, business continuity plan, and internal control procedures

A note on AML credibility: Latvia’s anti-money laundering framework received a strong international endorsement in February 2026, when a MONEYVAL report rated Latvia’s AML system very highly. This assessment has directly encouraged international companies to seek licences in Latvia, providing additional reputational assurance for businesses choosing the jurisdiction.

Fiscal Framework Benefits: Incentivizing Growth Through Tax Efficiency

Latvia’s tax framework is structured to support reinvestment and growth:

• Corporate Income Tax (CIT): 0% on undistributed or reinvested profits; 20% applies upon distribution.
• 0.8 Coefficient Nuance: The 20% tax applies to the gross distributed amount; therefore, net distribution calculations require division by 0.8 (e.g., €100 net dividend results in €25 tax liability).
• Crypto Capital Gains: 25.5% tax on cryptocurrency transaction profits.
• Personal Income Tax (2026):
  • 25.5% up to €105,300
  • 33% above €105,300
  • 3% surcharge above €200,000 annual income

Infrastructure Advantage

Latvia offers strong fintech infrastructure through its Electronic Clearing System (EKS), enabling non-bank payment providers to access SEPA payment infrastructure directly. Currently, 13 participants use the EKS — including three payment and e-money institutions in Latvia and ten institutions licensed in other EU countries, with further participants preparing to join. Additionally, Latvia is one of only two Eurozone countries offering instant payee name verification services, improving fraud prevention and payment security.

Case Study: Trek Technologies (Backpack EU) Secures MiCA License

The practical application of Latvia’s regulatory framework is demonstrated by Trek Technologies SIA, operating under the Backpack EU brand. Backpack EU is an international crypto exchange and wallet infrastructure provider, now authorised to provide the full range of crypto-asset and payment services across the European Union.

ECOVIS ProventusLaw advised Trek Technologies through the MiCA licensing process. The CASP licence authorises Backpack EU to provide custody and administration of crypto-assets, exchange of crypto-assets for funds and other crypto-assets, execution of orders on behalf of clients, and transfer services — with a payment institution licence issued alongside, enabling the company to execute payments across the EEA.

This case reflects the broader trend of established international crypto businesses selecting Latvia as their regulated entry point into the European digital asset market.

ECOVIS ProventusLaw Experience in Baltic Financial Licensing

MiCA and financial licensing projects require coordination across regulatory, corporate, AML/CFT, governance, tax, and operational frameworks.

ECOVIS ProventusLaw is a top tier business law firm with a presence in all three Baltic states — Lithuania, Latvia, and Estonia — and part of the ECOVIS International network operating in more than 90 countries worldwide. The firm has supported over 80 licensing projects, including more than 40 EMI, payment institution, and MiCA licensing mandates across the Baltic states.

ECOVIS ProventusLaw advises international fintech, payments, and digital asset companies on EEA market entry and regulatory structuring — combining high-level legal expertise with practical, commercially focused advice.

The firm and its lawyers have been consistently ranked by Chambers and Partners, IFLR1000, and The Legal 500 (2019–2026) in FinTech, Banking & Finance, and related practice areas.