Issuing tokens other than asset-referenced tokens and electronic money tokens

Published: 18.07.2024 Updated: 13.08.2024

How to obtain the right to offer crypto-asset tokens other than asset-referenced tokens and electronic money tokens in Latvia?

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 detailed information on the classification of crypto-assets

A legal person is entitled to offer to the public a token other than an asset-referenced token or electronic money token ('e-money token') or seek its admission to trading if the legal person:

1) has drawn up a crypto-asset white paper for a specific crypto-asset in accordance with the requirements of Article 6 of Regulation (EU) 2023/1114;

2) has notified Latvijas Banka of the crypto-asset white paper in accordance with the requirements and arrangements of Article 8 of Regulation (EU) 2023/1114. The notification must be submitted by the offeror, persons seeking admission to trading and the operator of the crypto-asset trading platform. Latvijas Banka does not require the crypto-asset white papers and marketing communications to be approved prior to their publication;

3) has published the crypto-asset white paper on its website in accordance with the requirements and arrangements of Article 9 of Regulation (EU) 2023/1114. Where an offer to the public of a crypto-asset other than an asset-referenced token or e-money token is exempt from the obligation to publish a crypto-asset white paper under Article 4(2) or (3) of Regulation (EU) 2023/1114, but a white paper is nevertheless drawn up voluntarily, the requirements and arrangements of Regulation (EU) 2023/1114 apply to its drafting and publishing;

4) has drafted the marketing communications, if any, for a specific crypto-asset in accordance with Article 7 of Regulation (EU) 2023/1114;

5) has published the marketing communications, if any, for a specific crypto-asset in accordance with Article 9 of Regulation (EU) 2023/1114;

6) complies with the requirements of Article 14 of Regulation (EU) 2023/1114 for persons seeking admission to trading.

When a crypto-asset is admitted to trading on the initiative of the operator of a trading platform and a crypto-asset white paper has not been previously published in accordance with Article 9 of Regulation (EU) 2023/1114 in the cases required by this Regulation, the operator of that trading platform for crypto-assets complies with the requirements set out above.

Any subsequent offer to the public of the crypto-asset is deemed a separate offer to the public to which the requirements above apply, without prejudice to the possible application to the subsequent offer to the public. No additional crypto-asset white paper is required for any subsequent offer so long as the crypto-asset white paper has been published in accordance with Articles 9 and 12 of Regulation (EU) 2023/1114, and the person responsible for drawing up such white paper consents to its use in writing.

Exceptions to the application of the aforementioned requirements

The requirements of Paragraphs 1, 2, 3, and 5 do not apply to any of the following offers to the public of crypto-assets other than asset-referenced tokens or e-money tokens:

1) an offer to fewer than 150 natural or legal persons per Member State where such persons are acting on their own account;

2) over a period of 12 months, starting with the beginning of the offer, the total consideration of an offer to the public of a crypto-asset in the European Union does not exceed 1 000 000 euro, or the equivalent amount in another official currency or in crypto-assets;

3) an offer of a crypto-asset addressed solely to qualified investors where the crypto-asset can only be held by such qualified investors.

The requirements of Regulation (EU) 2023/1114 do not apply to offers to the public of crypto-assets other than asset-referenced tokens or e-money tokens where any of the following apply.

1) The crypto-asset is offered for free. A crypto-asset is not considered to be offered for free where purchasers are required to provide, or to undertake to provide, personal data to the offeror in exchange for that crypto-asset, or where the offeror of a crypto-asset receives from the prospective holders of that crypto-asset any fees, commissions, or monetary or non-monetary benefits in exchange for that crypto-asset.

2) The crypto-asset is automatically created as a reward for the maintenance of the distributed ledger or the validation of transactions.

3) The offer concerns a utility token providing access to a good or service that exists or is in operation. Where the offer to the public of the crypto-asset concerns a utility token providing access to goods or services that do not yet exist or are not yet in operation, the duration of the offer to the public, as described in the crypto-asset white paper, does not exceed 12 months from the date of publishing the crypto-asset white paper.

4) The holder of the crypto-asset has the right to use it only in exchange for goods and services in a limited network of merchants with contractual arrangements with the offeror provided that where, for each 12-month period, the total consideration of an offer to the public of a crypto-asset in the European Union exceeds 1 000 000 euro, the offeror submits a notification to Latvijas Banka containing a description of the offer and explaining why the offer is exempt in accordance with this exception. Latvijas Banka is entitled to take a decision disqualifying the activity from the limited network exemption and will inform the offeror accordingly.

The exemptions do not apply where the offeror, or any other person acting on the offeror's behalf, states in the notification its intention to seek admission to trading of a crypto-asset other than an asset-referenced token or e-money token.

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.

Costs

No additional costs that might be associated with issuing tokens other than asset-referenced tokens and e-money tokens are involved.

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

Crypto-assets