The Saeima1 has adopted and
the President has proclaimed the following law:
Law on
Crypto-asset Services
Chapter I
General Provisions
Section 1. Terms Used in the Law
The terms used in this Law correspond to the terms defined in
Article 3 of Regulation (EU) 2023/1114 of the European Parliament
and of the Council of 31 May 2023 on markets in crypto-assets,
and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010
and Directives 2013/36/EU and (EU) 2019/1937 (hereinafter -
Regulation No 2023/1114).
Section 2. Purpose of the Law
The purpose of the Law is to promote the development of the
field of crypto-assets and define the legal framework for the
operation of the market in crypto-assets in Latvia.
Section 3. Scope of Application of
the Law
(1) The Law applies to the persons who are engaged in the
issuance, offer to the public, and admission to trading of
crypto-assets or provide crypto-asset services in Latvia
(hereinafter all together - the subjects of the Law).
(2) The Law determines the competent supervisory authority in
accordance with Regulation No 2023/1114 and the rights and
obligations of the authority.
Section 4. Competent Supervisory
Authority, Rights and Obligations Thereof
(1) In Latvia, Latvijas Banka is the competent supervisory
authority designated in accordance with Article 93(1) of
Regulation No 2023/1114.
(2) Latvijas Banka has the right to determine the content and
procedures for the submission of the operational reports and
other information to be provided by the subjects of the Law.
(3) Latvijas Banka has the right to determine the requirements
governing the operation of the subjects of the Law and the
procedures for the compliance with such requirements in
conformity with the decisions, guidelines, and recommendations of
the European Banking Authority or the European Securities and
Markets Authority in respect of the issuance, offer to the
public, or admission to trading of crypto-assets, and also the
provision of crypto-asset services.
(4) Latvijas Banka shall determine the criteria by which
crypto-asset service providers who provide advice on
crypto-assets shall ensure that natural persons who provide
information about crypto-assets or a crypto-asset service,
including advice on crypto-assets, on their behalf have the
necessary knowledge and competence in the relevant field.
(5) Latvijas Banka has the rights specified in Article 94(1)
and (3) of Regulation No 2023/1114 in the implementation of the
supervision of the subjects of the Law.
Chapter
II
Rights and Obligations of the Subjects of the Law
Section 5. General Rights and
Obligations of the Subjects of the Law
(1) The subject of the Law has the obligation to immediately
inform Latvijas Banka of all material changes, including of all
circumstances which may negatively affect the future operation of
the subject of the Law, or changes in the information submitted
thereto in order to obtain the authorisation to issue, offer to
the public, or admit to trading crypto-assets, or provide
crypto-asset services.
(2) In order to fulfil the requirements of Article 70(3) of
Regulation No 2023/1114, a crypto-asset service provider has the
right to open an account with a credit institution or Latvijas
Banka in order to place clients' funds other than electronic
money tokens. Latvijas Banka may open the account referred to in
this Section if it conforms with the legal framework of the
European Union, including the European Central Bank.
Section 6. Payments to Latvijas
Banka
(1) A person who is planning to provide crypto-asset services
(if it is not a financial market participant the operation of
which is supervised by Latvijas Banka) shall submit to Latvijas
Banka the application for obtaining the authorisation to provide
crypto-asset services and shall pay EUR 2500 for the examination
of the application.
(2) A person who is planning to offer to the public or admit
to trading an asset-referenced token (if such person is not a
financial market participant the operation of which is supervised
by Latvijas Banka) shall submit to Latvijas Banka the application
for obtaining the authorisation to offer to the public or admit
to trading an asset-referenced token and shall pay EUR 2500 for
the examination of the application.
(3) A financial market participant the operation of which is
supervised by Latvijas Banka, including the issuer which has
obtained the authorisation to offer to the public or admit to
trading an asset-referenced token, shall submit to Latvijas Banka
the application for obtaining the authorisation to offer to the
public or to admit to trading each other asset-referenced token
and shall pay EUR 1250 for the examination of the application,
but the total fee to Latvijas Banka shall not exceed EUR 5000 per
year irrespective of the number of applications.
(4) A crypto-asset service provider who has received the
authorisation to provide crypto-asset services in accordance with
Article 63 of Regulation No 2023/1114 shall pay to Latvijas Banka
up to 0.6 per cent (inclusive) per year of the gross revenues
related to the provision of crypto-asset services, but not less
that EUR 3000 per year.
(5) A financial market participant (except for a credit
institution, an investment firm, a central securities depository,
and the operator of a regulated market) the operation of which is
supervised by Latvijas Banka and which has obtained the
authorisation to provide crypto-asset services in accordance with
Article 60 of Regulation No 2023/1114 shall pay to Latvijas Banka
up to 0.6 per cent (inclusive) per year of the gross revenues
related to the provision of crypto-asset services.
Chapter
III
Liability
Section 7. Violations in the Field
of Crypto-asset Services
Latvijas Banka is entitled to impose sanctions and
administrative measures if it establishes that the subject of the
Law or the person responsible for the violation fails to comply
with:
1) the requirements laid down in Article 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, or 14 of Regulation No 2023/1114 with regard to offer
to the public and admission to trading of crypto-assets other
than asset-referenced tokens or electronic money tokens, the
content, format, notification, publication, amending of such
crypto-asset white paper and marketing communications, the
provision of the right of withdrawal of such crypto-assets for
private holders, and also the fulfilment of the obligations of
the offerors of such crypto-assets and the persons who ask for
admission to trading;
2) the requirements laid down in Article 16, 17, 19, 22, 23,
25, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41,
46, or 47 of Regulation No 2023/1114 with regard to the issuance
of asset-referenced tokens, the offer to the public or admission
to trading, the obtaining of the authorisation to perform the
abovementioned activities, the provision of information to
Latvijas Banka on the value of the issued asset-referenced
tokens, their holders and transactions with them, the compliance
with the restrictions on the issuance of asset-referenced tokens,
the fulfilment of the obligations of the issuer of
asset-referenced tokens, the holding of the reserves of assets,
the development and maintenance of the recovery and redemption
plans, their submission to Latvijas Banka, review and updating,
and also the provision of information to Latvijas Banka on the
changes in the size of the qualifying holding of the acquirer of
the qualifying holding;
3) the requirements laid down Article 48, 49, 50, 51, 53, 54,
or 55 of Regulation No 2023/1114 with regard to the issuance,
offer to the public, or admission to trading of electronic money
tokens, the obtaining of the authorisation to perform the
abovementioned activities, the electronic money token redemption,
the compliance with the prohibition of granting interest, the
content, format, notification, publication of such crypto-asset
white paper and marketing communications, the compliance with the
procedures for investing funds received in exchange for
electronic money tokens, and also the development and maintenance
of the recovery and redemption plans, submission to Latvijas
Banka, review and updating;
4) the requirements laid down Article 59, 60, 64, 65, 66, 67,
68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, or 83
of Regulation No 2023/1114 with regard to the obtaining of the
permit to provide crypto-asset services and the provision of such
services, the fulfilment of the obligations of a crypto-asset
service provider, the ensuring of the management procedures, the
provision of information to Latvijas Banka on changes in the
management structure of the crypto-asset service provider, the
ensuring of the safe storage of clients' crypto-assets and funds,
the establishment and maintenance of complaint handling
procedures, the identification, prevention, management, and
detection of conflicts of interest, the use of outsourcing
services, the development and maintenance of a liquidation plan,
and also the provision of information to Latvijas Banka on the
changes in the size of the qualifying holding of the acquirer of
the qualifying holding;
5) the requirements laid down in Article 88(1), (2), or (3) of
Regulation No 2023/1114 with regard to the publication of inside
information;
6) the requirements laid down in Article 89 of Regulation No
2023/1114 with regard to the prohibition of insider dealing;
7) the requirements laid down in Article 90 of Regulation No
2023/1114 with regard to the prohibition of unlawful disclosure
of inside information;
8) the requirements laid down in Article 91 of Regulation No
2023/1114 with regard to the prohibition of market
manipulation;
9) the requirements laid down in Article 92(1) of Regulation
No 2023/1114 with regard to the detection and prevention of
market abuse;
10) the requirements laid down in Article 94(3) of Regulation
No 2023/1114 with regard to the provision of information,
documents, and data to Latvijas Banka upon request or demand
thereof and also with regard to the compliance with other
requirements laid down by Latvijas Banka on implementing the
supervision of the subject of the Law.
Section 8. Sanctions and
Administrative Measures
(1) Latvijas Banka is entitled to impose the following
sanctions on the subject of the Law or the person responsible for
the violation:
1) a warning for the violations referred to in Section 7 of
this Law;
2) a fine on a natural person:
a) up to EUR 700 000 or up to twice the amount of the income
gained as a result of the violation or the potential loss
prevented for the violations referred to in Section 7, Clause 1,
2, 3, or 4 of this Law;
b) up to EUR 1 000 000 or up to three times the amount of the
income gained as a result of the violation or the potential loss
prevented for the violation referred to in Section 7, Clause 5 of
this Law;
c) up to EUR 5 000 000 or up to three times the amount of the
income gained as a result of the violation or the potential loss
prevented for the violations referred to in Section 7, Clause 6,
7, 8, or 9 of this Law;
3) a fine on a legal person:
a) up to EUR 5 000 000 or three per cent of the total turnover
of the previous reporting year according to the previous approved
annual statement, or up to twice the amount of the income gained
as a result of the violation or the potential loss prevented for
the violations referred to in Section 7, Clause 1 of this
Law;
b) up to EUR 5 000 000 or five per cent of the total turnover
of the previous reporting year according to the previous approved
annual statement, or up to twice the amount of the income gained
as a result of the violation or the potential loss prevented for
the violations referred to in Section 7, Clause 4 of this
Law;
c) up to EUR 5 000 000 or 12.5 per cent of the total turnover
of the previous reporting year according to the previous approved
annual statement, or up to twice the amount of the income gained
as a result of the violation or the potential loss prevented for
the violations referred to in Section 7, Clause 2 or 3 of this
Law;
d) up to EUR 2 500 000 or up to two per cent of the total
turnover of the previous reporting year according to the previous
approved annual statement for the violation referred to in
Section 7, Clause 5 of this Law;
e) up to EUR 15 000 000 or up to 15 per cent of the total
turnover of the previous reporting year according to the previous
approved annual statement, or up to three times the amount of the
income gained as a result of the violation or the potential loss
prevented for the violations referred to in Section 7, Clause 6,
7, 8, or 9 of this Law;
4) to prohibit, for 10 years, a member of the executive board
or supervisory board of the crypto-asset service provider or
another natural person responsible for the violation to hold a
position in the management body of the crypto-asset service
provider for repeated violations referred to in Section 7, Clause
6, 7, 8, or 9 of this Law;
5) to cancel the authorisation issued to the subject of the
Law to issue, offer to the public, or admit to trading
crypto-assets (including asset-referenced tokens and electronic
money tokens) or provide crypto-asset services.
(2) If the subject of the Law on which the sanction referred
to in Paragraph one, Clause 3 of this Section is to be imposed is
a subsidiary of a parent undertaking or a branch of such
subsidiary which prepares a consolidated financial statement in
accordance with the Law on Annual Statements and Consolidated
Annual Statements, the relevant total annual turnover shall be
the total annual turnover or a type of revenues corresponding
thereto in accordance with the relevant legal acts of the
European Union in the field of accounting, taking into account
the latest available consolidated financial statement of the
ultimate parent undertaking.
(3) Latvijas Banka is entitled to impose the following
administrative measures:
1) to request the natural or legal person responsible for the
violation to cease the relevant activity, for the violations
referred to in Section 7 of this Law;
2) to impose a temporary prohibition on a member of the
executive board or supervisory of a crypto-asset service provider
or another natural person responsible for the violation until the
final ruling enters into effect, but not longer than for two
years, to hold the position of a member of the executive board or
supervisory board of a crypto-asset service provider, for the
violations referred to in Section 7, Clause 4, 5, 6, 7, 8, or 9
of this Law;
3) to impose a temporary prohibition on a member of the
executive board or supervisory board of a crypto-asset service
provider or another natural person responsible for the violation
until the final ruling enters into effect, but not longer than
for two years, to make transactions on their own behalf, for the
violations referred to in Section 7, Clause 5, 6, 7, 8, or 9 of
this Law.
(4) Latvijas Banka is entitled to impose administrative
measures separately or in addition to the sanctions.
Section 9. Term for the Examination
of an Administrative Case, the Appeal and Operation of an
Administrative Act
(1) Latvijas Banka may take the decision to impose sanctions
and administrative measures within two years from the day when
the administrative case has been initiated.
(2) Due to objective reasons, including if the case requires a
protracted determination of facts, Latvijas Banka may, by taking
a relevant decision, extend the time limit for taking the
decision specified in Paragraph one of this Section for a period
not exceeding three years from the day of initiating the case.
The decision on extending the time limit shall not be subject to
appeal.
(3) An administrative act issued by Latvijas Banka on the
basis of the requirements of Regulation No 2023/1114, other
directly applicable legal acts of the European Union, this Law,
and the regulations issued by Latvijas Banka in the field of
crypto-assets may be appealed before the Regional Administrative
Court. The court in the composition of three judges shall examine
the case as the court of first instance. The judgment of the
Regional Administrative Court may be appealed by filing a
cassation complaint.
(4) If Latvijas Banka, based on the requirements of Regulation
No 2023/1114, other directly applicable legal acts of the
European Union, this Law, and the regulations issued by Latvijas
Banka in the field of crypto-assets, has issued an administrative
act, except for the decision to impose a fine, contesting and
appealing of this act shall not suspend the operation
thereof.
Section 10. Statute of
Limitation
(1) Latvijas Banka may initiate an administrative case
regarding the violation of the requirements laid down in
Regulation No 2023/1114, other directly applicable legal acts of
the European Union, this Law, and the regulations issued by
Latvijas Banka in the field of crypto-assets not later than
within five years from the day of committing the violation, but
if the violation is long-lasting, from the day of termination of
the violation.
(2) The calculation of the statute of limitation specified in
Paragraph one of this Section shall be stopped from the day when
the administrative case is initiated.
Transitional
Provisions
1. Section 6, Paragraph one of this Law shall be applicable
from 30 December 2024.
2. A crypto-asset service provider who has commenced the
provision of crypto-asset services until 30 December 2024 and
whose operation is supervised by the State Revenue Service in
accordance with Section 45, Paragraph two, Clause 6, Sub-clause
"e" of the Law on the Prevention of Money Laundering and
Terrorism and Proliferation Financing is entitled, until 30 June
2025, to continue the provision of crypto-asset services without
obtaining the authorisation from Latvijas Banka to provide
crypto-asset services in accordance with the requirements of
Regulation No 2023/1114. If such crypto-asset service provider,
by 30 June 2025, submits to Latvijas Banka the application for
obtaining the authorisation to provide crypto-asset services in
accordance with the requirements of Regulation No 2023/1114, it
is entitled to continue the provision of crypto-asset services
without the abovementioned authorisation until Latvijas Banka has
examined its application and taken the decision to issue the
authorisation to provide crypto-asset services in accordance with
the requirements of Regulation No 2023/1114.
3. The State Revenue Service shall, upon request of Latvijas
Banka, transfer the information at its disposal which has been
obtained as a result of the implementation of the supervision
function on those crypto-asset service providers who, by 30 June
2025, have submitted to Latvijas Banka the application for
obtaining the authorisation to provide crypto-asset services in
accordance with the requirements of Regulation No 2023/1114.
This Law shall come into force on 30 June 2024.
This Law has been adopted by the Saeima on 13 June
2024.
President E. Rinkēvičs
Adopted 21 June 2024
1The Parliament of the Republic of
Latvia
Translation © 2024 Valsts valodas centrs (State
Language Centre)
