Latvia’s Approach To Fintech And Emerging Technologies

  • This article explores Latvia’s approach to regulating and embracing emerging technologies like cryptocurrency and artificial intelligence. Latvia is a relatively unassuming player in the financial and emerging tech worlds.
  • One will learn more about Latvia’s approach to fintech innovation, regulatory issues, and its role in building a tech-forward environment via the perspectives of Marine Krasovska, Head of Financial Technology at Latvijas Banka (Bank of Latvia).

International authorities are battling to understand and efficiently regulate these developments in the quickly changing world of fintech and new technologies. While nations such as the United States and El Salvador have dominated the adoption of new technology, Latvia, which is tucked into the Baltic area with Estonia and Lithuania, has been subtly stepping into this exciting field.

In this article, the Head of Financial Technology at Latvijas Banka, the central bank of Latvia, Marine Krasovska, shares her perspective on how Latvia regulates fintech, cryptocurrencies, and artificial intelligence (AI).

Regulation Of Cryptocurrencies: A Work In Progress

In contrast to its technologically advanced neighbor Estonia, which set the bar for transparent laws for virtual currencies, Latvia’s position on cryptocurrencies is still uncontrolled. Cryptocurrencies are regarded as capital assets under the Latvian Personal Income Tax Act and are subject to a general capital gains tax rate of 20%. One of Latvia’s financial authorities, the Financial and Capital Market Commission (FCMC), issued cautions regarding cryptocurrency fraud back in 2020, highlighting the comparatively lax regulatory environment that crypto businesses operate in Latvia under in comparison to traditional financial markets.

An Innovation Engine For Fintech: Latvia

Through its Innovation Hub, Latvia’s central bank has supported fintech innovation over the past five years. Fintech businesses are not required to participate in the hub, but it offers a useful ‘first entry point’ to the Latvian market. Both local and foreign businesses can take advantage of this free service provided by the central bank. Businesses may interact directly with authorities through the Innovation Hub and learn more about risk evaluations and company license requirements. The center also offers a pre-licensing procedure that helps fintech firms, particularly those working with digital assets, put together a thorough collection of documentation that can be checked for quality.

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Technology Adoption In Central Banks

In addition to aiding companies, Latvijas Banka is itself adopting new Technologies. To improve operations, the central bank is moving its data architecture to the cloud and integrating AI tools like OpenAI’s ChatGPT. A two-year-old internal lab is continuously experimenting with different technical solutions. The bank uses AI for code oversight and data management initiatives.

Synthetic Data Initiative

Latvijas Banka is leading the way with a project involving synthetic data because it recognizes the need for easily available data sets. Legal restrictions prevent the bank from giving IT businesses the data sets they need to develop their business models. To solve this problem, the bank is developing an integrated database that can provide synthetic data, aiding research and development across several fields.

Sentiment Of Latvia’s Cryptocurrency Market

Local investments in Latvia’s cryptocurrency market have decreased, according to a central bank study, which shows a 50% dip in such investments over the previous year. Payment card use data revealed a reduction in the population’s percentage of investors in crypto assets, which allowed for the observation of this decline. This shift in opinion is attributed by Marine Krasovska to both regulatory difficulties and situations on the world market. She recognizes that uncertainty has affected investor confidence across all financial markets, excluding the cryptocurrency industry. However, she cites the Markets in Crypto-Assets (MiCA) law of the European Union as a legal framework that the central bank can use going forward.


Despite not being as well known as some other countries in the fintech and new technologies sectors, Latvia is quietly establishing itself as an innovation hotspot. The Latvian central bank is aggressively promoting the development of fintech in the area through programs like the Innovation Hub, the use of AI technology, and its investigation of synthetic data. Latvia is prepared to adapt to and embrace the shifting environment of digital finance and technology as the cryptocurrency market changes and regulatory frameworks advance.

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