Published: 18.07.2024 Updated: 13.08.2024

How to obtain authorisation to offer an asset-referenced token or seek its admission to trading?
Obtaining authorisation is a regulated process whereby you can become a participant in Latvia's financial market and start business after receiving the authorisation.

Only an issuer of an asset-referenced token is authorised to offer to the public the asset-referenced token or request its admission to trading:

  • a legal person that has received authorisation in accordance with Article 21 of Regulation (EU) 2023/1114 or
  • a credit institution that complies with the requirements laid down in Article 17 of Regulation EU 2023/1114 and has received authorisation pursuant to the aforementioned Article.

The provision on obtaining authorisation does not apply if:

  • over a period of 12 months, calculated at the end of each calendar day, the average outstanding value of the asset-referenced token does not exceed 5 000 000 euro, or the equivalent amount in another official currency, and the issuer is not linked to a network of other exempt issuers, or
  • the offer to the public of the asset-referenced token is addressed solely to qualified investors and the asset-referenced token can only be held by such qualified investors.

Where any of these exemptions applies, issuers of asset-referenced tokens draw up a crypto-asset white paper as provided for in Article 19 of Regulation EU 2023/1114 and, upon request, submit this crypto-asset white paper and any marketing communications to Latvijas Banka.

Obtaining authorisation for legal persons

Regulation EU 2023/1114 classifies crypto-assets into three types, which should be distinguished from one another and subject to different requirements depending on the risks they entail. The classification is primarily based on whether the crypto-assets seek to stabilise their value by reference to other assets.

More details on the classification of crypto-assets

An 'asset-referenced token' means a type of crypto-asset that is not an electronic money token ('e-money token') and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies. In this case, an official currency means the official currency of a country that is issued by a central bank or another monetary authority.

Validity within the European Union: the authorisation granted by Latvijas Banka to an issuer of an asset-referenced token is valid throughout the entire European Union and entitles an issuer to offer to the public the asset-referenced token for which it has been authorised, or to seek admission to trading of such asset-referenced token. The approval of the white paper granted by Latvijas Banka is valid throughout the entire European Union.

Regulation (EU) 2023/1114 does not apply to several cases such as when crypto-asset services are provided in a fully decentralised manner, i.e. without any intermediaries, or involve individual crypto-assets such as NFTs (crypto-assets that are unique and non-fungible). For a detailed list of exceptions, please see Article 2 of Regulation (EU) 2023/1114.

The process of obtaining authorisation involves several stages

Find out what entrepreneurs need to do and know at each stage of obtaining authorisation, what Latvijas Banka does and what are the application review deadlines.

The process of obtaining authorisation is preceded by a familiarisation stage, during which Latvijas Banka organises a meeting with the entrepreneur to discuss the planned activities. At this stage, the company does not necessarily have to be established yet.

What does the entrepreneur do

  • Collects information on the company's shareholders and officials.
  • Prepares information on the planned issuance model, admission to trading and the trading platform, the technical solutions to be used, and customers.
  • Starts drafting the necessary documents.

What does Latvijas Banka do

  • Provides advice on the applicable regulation and documents to be submitted.
  • Conducts the initial conformity assessment.
  • Assesses whether it is possible to continue the process of obtaining authorisation.

What additional actions should the entrepreneur take

  • Carefully familiarise oneself with the requirements of legal acts.
  • Assess the need to engage qualified consultants.
  • When engaging consultants, the company should actively participate in the process so that the final result is appropriate for the business model and its inherent risks.

Documents to be submitted

  • CVs of shareholders and officials;
  • a description of the issuance, services, and their provision.

Costs

Latvijas Banka provides assistance with preparing an application and offers advice free of charge.

The entrepreneur prepares and submits an application for obtaining authorisation and for the approval of the white paper.

What does the entrepreneur do

  • Submits a completed application, all accompanying information, and documents according to the requirements laid down in Articles 18 and 19 of Regulation (EU) 2023/1114 in compliance with the regulatory technical standards (RTS) (the RTS draft versions are available here).
  • Receives information from Latvijas Banka on the commencement of the substantive review process of the application for authorisation or on any shortcomings that need to be addressed in the submitted application.
  • Provides the necessary additional explanations.

What does Latvijas Banka do

  • Within 25 working days, conducts a completeness check of the application and the white paper (a substantive assessment of the application has not yet been initiated).
  • If the application is incomplete, notifies the entrepreneur by letter containing information on the identified shortcomings and sets a deadline by which they need to be addressed.
  • If the application is complete, notifies the entrepreneur by letter containing information on the commencement of the application review.
  • Designates the manager of the project on issuing authorisation and coordinates the process of obtaining authorisation.

What additional actions should the entrepreneur take

  • Utilise advice offered by Latvijas Banka before submitting the application.
  • Ensure the documents to be submitted are complete and of high quality.
  • Prepare the documents according to the planned types of services.
  • Check whether all the necessary documents have been submitted (refer to the list of documents to be submitted below).

List of documents to be submitted

A legal person submits an application to obtain authorisation to offer to the public the asset-referenced token or to request its admission to trading. The application is prepared according to the RTS requirements (the RTS draft versions are available here), appending the information and documents pursuant to the requirements of Regulation (EU) 2023/1114, to include the following.

1) A programme of operations which sets out the business model that the applicant issuer intends to follow.

2) A legal opinion that the asset-referenced token does not qualify as a crypto-asset excluded from the scope of Regulation (EU) 2023/1114 pursuant to Article 2(4), or an e-money token.

3) A detailed description of the governance arrangements referred to in Article 34(1) of Regulation (EU) 2023/1114.

4) A description of the internal control mechanisms and procedures of the specific crypto-asset service providers to ensure compliance with obligations in relation to money laundering and terrorism and proliferation financing under Directive (EU) 2015/849 (this applies where cooperation arrangements with specific crypto-asset service providers exist).

5) Information on the members of the management body, assessment of their repute, knowledge, skills, and experience (CVs, documents certifying their education, a statement from the Punishment Register).

6) Information on the stockholders (shareholders) that have a qualifying (direct or indirect) holding in the applicant and the size of the holding as well as information on the assessment of their repute (CVs, a statement from the Punishment Register); a description of the structure of the commercial company's stockholders (shareholders).

7) The crypto-asset white paper drawn up in accordance with the requirements of Article 19 of Regulation (EU) 2023/1114.

8) The policies and procedures referred to in Article 34(5), first subparagraph, of Regulation (EU) 2023/1114.

9) A description of the contractual arrangements with third-party entities referred to in Article 34(5) of Regulation (EU) 2023/1114.

10) A description of the business continuity policy referred to in Article 34(9) of Regulation (EU) 2023/1114, including effective plans for emergency situations as well as a description of the procedure for regularly checking and reviewing the suitability and efficiency of these plans.

11) A description of the internal control mechanisms and risk management procedures referred to in Article 34(10) of Regulation (EU) 2023/1114.

12) A description of the systems and procedures in place to safeguard the availability, authenticity, integrity and confidentiality of data referred to in Article 34(11) of Regulation (EU) 2023/1114.

13) A list of the host Member States where the applicant issuer intends to offer the asset-referenced token to the public or intends to seek admission to trading of the asset-referenced token (if applicable).

14) The articles of association, unless available in public registers.

Costs

A person (other than a financial market participant supervised by Latvijas Banka) that intends to offer an asset-referenced token to the public or seek its admission to trading, pays Latvijas Banka 2500 euro for the review of the application.

A financial market participant supervised by Latvijas Banka, including an issuer that has already obtained authorisation to offer an asset-referenced token to the public or seek its admission to trading, pays Latvijas Banka 1250 euro for the review of each additional asset-referenced token application, with the total annual payments, regardless of the number of applications, not exceeding 5000 euro per year.

Review deadline for application

25 business days for a completeness check of an application.

Within 60 working days following the confirmation that the application is complete, Latvijas Banka reviews the application and takes a decision to issue or refuse to issue authorisation. The review deadline for the application may be extended for objective reasons if the information provided in the application is insufficient to take a decision.

Latvijas Banka carries out a substantive assessment of the application.

What does the entrepreneur do

  • Follows the review process of the application, consulting the project manager designated by Latvijas Banka.
  • Responds to Latvijas Banka's requests for additional information as soon as possible as well as appoints a contact person to ensure optimum communication.
  • Makes corrections to the submitted documents in line with Latvijas Banka's instructions.
  • Participates in the meetings held by Latvijas Banka.

What does Latvijas Banka do

  • Carries out a substantive assessment of the application.
  • Communicates with the entrepreneur's contact person in case shortcomings have been identified and drafts a letter.
  • Continues reviewing the application in line with the submitted additions.
  • Completes the assessment of the application.

What additional actions should the entrepreneur take

  • Follow the course of the review of the application.
  • Provide additional explanations and make the necessary corrections as soon as possible.
  • Representatives of the entrepreneur, rather than only consultants (if engaged), are also invited to participate in the meetings held by Latvijas Banka.

Costs

No additional costs associated with the review of documents are involved during the assessment stage of the application.

Latvijas Banka completes the assessment of the application and takes a decision to grant or refuse to grant authorisation.

What does the entrepreneur do

  • Prepares to obtain authorisation and start operating in accordance with the business plan and the procedures developed in association with the internal control system.
  • Designates users of Latvijas Banka's data reporting system for future communication with Latvijas Banka and submission of performance reports.

What does Latvijas Banka do

  • Drafts a decision to grant or refuse to grant authorisation.
  • Informs the entrepreneur of the decision taken.
  • In the case of a positive decision, publishes information on its website and provides information to the European Securities and Markets Authority.

What additional actions should the entrepreneur take

  • Familiarise oneself with the information provided by Latvijas Banka regarding access to the data reporting system.
  • Familiarise oneself with the information related to the requirements and procedure for submitting performance reports.
  • Prepare to start operating in accordance with the approved business plan and procedures.

Costs

No additional costs associated with obtaining authorisation are involved during the stage of obtaining authorisation.

Latvijas Banka supervises the operation of the company in accordance with the requirements of Regulation (EU) 2023/1114.

What does the entrepreneur do

  • Responds to Latvijas Banka's requests.
  • Drafts reports in accordance with the requirements of Regulation (EU) 2023/1114.
  • Notifies Latvijas Banka of any changes in the information and documents submitted for obtaining authorisation.
  • Notifies Latvijas Banka of any changes in the procedure for providing services.
  • Notifies Latvijas Banka of significant incidents in the process of providing services.
  • Becomes acquainted with the curator designated by Latvijas Banka.

What does Latvijas Banka do

  • Designates the curator of the company.
  • Assesses compliance of the company's operation with the requirements of legal acts.
  • Requests additional information on the operation and performance indicators of the company.
  • Examines the reports submitted and supervisory information.

What additional actions should the entrepreneur take

  • In case of uncertainties, contact the curator designated by Latvijas Banka.
  • Submit reports and the requested supervisory information on a regular basis.
  • Notify of any changes in the process of service provision as well as of changes in the information and documents submitted to receive authorisation, including in the case of any changes in the structure of officials or shareholders.

Costs

No additional costs associated with the provision of supervision are involved during the supervision stage.

Meeting with prospective market participants

Latvijas Banka's specialists offer advice to prospective market participants to facilitate a greater understanding of the regulatory requirements as well as to identify potential challenges in developing new and innovative products or business models. Latvijas Banka's specialists offer:

  • clarifications of certain aspects associated with regulatory requirements;
  • advice on the application of the regulation in the early stage of developing an innovative product or business model.

Apply for a consultation 
Please apply in advance to agree on a meeting time by e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone +371 67022300.

Useful information

Obtaining authorisation for credit institutions

A credit institution that has already obtained Latvijas Banka's licence is entitled, within the scope of Regulation (EU) 2023/1114, to issue an asset-referenced token and to offer it to the public or seek its admission to trading, provided that it has received Latvijas Banka's authorisation pursuant to Article 17 of Regulation (EU) 2023/1114. The process of obtaining authorisation is similar to that followed by the existing financial market participants when applying for authorisation to provide additional services as part of the licence or authorisation they have already obtained.

Regulation (EU) 2023/1114 does not apply to several cases such as when crypto-asset services are provided in a fully decentralised manner, i.e. without any intermediaries, or involve individual crypto-assets such as NFTs (crypto-assets that are unique and non-fungible). For a detailed list of exceptions, please see Article 2 of Regulation (EU) 2023/1114.

List of documents to be submitted and the submission procedure

I White paper

1) The credit institution produces a crypto-asset white paper on the asset-referenced token pursuant to the requirements stipulated in Article 19 of Regulation (EU) 2023/1114 and the regulatory technical standards (RTS; the RTS draft versions are available here).

2) The credit institution submits the produced white paper to Latvijas Banka for approval as per the procedure laid down in the RTS (the RTS draft versions are available here); the crypto-asset white paper must be approved by Latvijas Banka before its publication.

II Prior to the first issue of an asset-referenced token, the credit institution submits the following information to Latvijas Banka:

1) a programme of operations which sets out the business model that the credit institution intends to follow;

2) a legal opinion that the asset-referenced token does not qualify as a crypto-asset excluded from the scope of Regulation (EU) 2023/1114 pursuant to Article 2(4) or an e-money token;

3) a detailed description of the governance arrangements referred to in Article 34(1) of Regulation (EU) 2023/1114;

4) a description of the internal control mechanisms and procedures of the specific crypto-asset service providers to ensure compliance with obligations in relation to the prevention of money laundering and terrorism and proliferation financing under Directive (EU) 2015/849 (this applies where cooperation arrangements with specific crypto-asset service providers exist);

5) the policies and procedures referred to in Article 34(5), first subparagraph, of Regulation (EU) 2023/1114;

6) a description of the contractual arrangements with third-party entities referred to in Article 34(5) of Regulation (EU) 2023/1114;

7) a description of the business continuity policy referred to in Article 34(9) of Regulation (EU) 2023/1114, including effective plans for emergency situations as well as a description of the procedure for regularly checking and reviewing the suitability and efficiency of these plans;

8) a description of the internal control mechanisms and risk management procedures referred to in Article 34(10) of Regulation (EU) 2023/1114;

9) a description of the systems and procedures in place to safeguard the availability, authenticity, integrity and confidentiality of data referred to in Article 34(11) of Regulation (EU) 2023/1114.

Articles 16, 18, 20, 21, 24, 35, 41, and 42 of Regulation (EU) 2023/1114 do not apply to the credit institutions issuing asset-referenced tokens, including significant asset-referenced tokens.

A credit institution that has previously notified Latvijas Banka of an issue of another asset-referenced token in accordance with Section II is not required to provide information that has already been submitted and has not changed. By submitting the required information, the credit institution confirms that the previously submitted information remains applicable.

Review deadline for the notification

At least 90 working days before initially providing the aforementioned services, the credit institution submits the information referred to in Sections I and II to Latvijas Banka.

Within 20 working days of receiving the notification, Latvijas Banka assesses whether all required information has been submitted. Should it find that the notification is incomplete, Latvijas Banka notifies the applicant of this and sets a deadline for submitting the missing information.

The review deadline for the notification may be extended for objective reasons if the information provided in the application is insufficient to take a decision.

Costs

A person (other than a financial market participant supervised by Latvijas Banka) that intends to offer an asset-referenced token to the public or seek its admission to trading, pays Latvijas Banka 2500 euro for the review of the application.

A financial market participant supervised by Latvijas Banka, including an issuer that has already obtained authorisation to offer an asset-referenced token to the public or seek its admission to trading, pays Latvijas Banka 1200 euro for the review of each additional asset-referenced token application, with the total annual payments, regardless of the number of applications, not exceeding 5000 euro per year.

Meeting with prospective market participants

Latvijas Banka's specialists offer advice to prospective market participants to facilitate a greater understanding of the regulatory requirements as well as to identify potential challenges in developing new and innovative products or business models. Latvijas Banka's specialists offer:

  • clarifications of certain aspects associated with regulatory requirements;
  • advice on the application of the regulation in the early stage of developing an innovative product or business model.

Apply for a consultation 
Please apply in advance to agree on a meeting time by e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone +371 67022300.

Useful information