Crypto-asset services provided by specific financial market participants

Published: 08.07.2024

How can financial market participants obtain authorisation to provide crypto-asset services?

Please note that the requirements of Regulation (EU) 2023/1114 for issuing authorisation to provide crypto-asset services will apply as of 30 December 2024.

The financial market participants, which have already obtained Latvijas Banka's licence or authorisation to provide financial services under the scope of Regulation (EU) 2023/1114, are entitled to obtain authorisation to provide certain types of additional services:

  • credit institutions  – the crypto-asset services as well as services associated with issuing asset-referenced tokens and e-money tokens;
  • central securities depositories – the crypto-asset service stipulated in point (17) of Article 3(1) of Regulation (EU) 2023/1114;
  • investment firms  – the crypto-asset services stipulated in points (17), (18), (19), (21), (22), (23), (24), and (25) of Article 3(1) of Regulation (EU) 2023/1114;
  • regulated market operators – the crypto-asset service stipulated in point (18) of Article 3(1) of Regulation (EU) 2023/1114;
  • electronic money institutions – the crypto-asset service as well as the service associated with issuing e-money tokens stipulated in points (17) and (26) of Article 3(1) of Regulation (EU) 2023/1114;
  • investment management firms – the crypto-asset services stipulated in points (24) and (25) of Article 3(1) of Regulation (EU) 2023/1114;
  • alternative investment fund managers – the crypto-asset services stipulated in points (23), (24), and (25) of Article 3(1) of Regulation (EU) 2023/1114.

The aforementioned market participants require authorisation from Latvijas Banka to provide crypto-asset services as per Article 60 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 specific 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). See a detailed list of exceptions in Article 2 of Regulation (EU) 2023/1114.

List of documents to be submitted

A financial market participant submits an application to obtain authorisation to provide crypto-asset services. The application is prepared according to the requirements of the regulatory technical standards (RTS; the RTS draft versions are available here), appending the information and documents specified in the application to include the following.

1) A programme of operations which sets out the types of crypto-asset services to be delivered, including where and how those services will be provided.

2) A description of the internal control and management framework mechanism, implementation policies, and procedures (also including a description of the administrative, risk management, and accounting procedures necessary to ensure appropriate and sufficient management of the institution) aiming to identify, assess, and manage risks.

3) A description of the procedure, instruction, arrangements, and measures as well as other documents ensuring the establishment and effective operation of the internal control system to manage risks associated with money laundering and terrorism and proliferation financing, and sanctions risk. This also includes a detailed assessment of the risks inherent in the services provided.

4) A plan and description of business continuity measures, 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.

5) The technical documentation of information and communication technology systems and security arrangements as well as a description thereof, including a description of the procedures and policies, a detailed assessment of the risks inherent in the services provided and a description of security control and risk mitigation measures.

6) A description of the measures and procedures implemented to ensure the segregation of customer crypto-assets and funds from the assets and funds of the crypto-asset service provider.

7) A description of arrangements for the custody and administration of assets, where crypto-asset custody and administration services are to be provided on behalf of customers.

8) A description of the trading platform's operating rules and of the procedures and system to detect market abuse, where a crypto-asset trading platform is to be operated.

9) A description of the non-discriminatory trading policy governing the relationship with customers as well as a description of the methodology for determining the price of the crypto-assets the applicant proposes to exchange for funds or other crypto-assets, where crypto-assets are to be exchanged for funds or other crypto-assets.

10) A description of the execution policy for orders, where crypto-asset orders are to be executed on behalf of customers.

11) Information on the required knowledge and expertise of the natural persons providing consultations or managing portfolios on behalf of the applicant, where crypto-asset consultations or portfolio management is to be provided.

12) A description outlining whether the crypto-asset service pertains to asset-referenced tokens, e-money tokens, or other crypto-assets.

13) Information on how the crypto-asset transfer services will be provided on behalf of customers, where such transfer services are to be provided.

Articles 62, 63, 64, 67, 83, and 84 of Regulation (EU) 2023/1114 do not apply to existing financial market participants.

The existing financial market participants are not required to provide information already submitted to Latvijas Banka. By submitting an application, a financial market participant explicitly indicates that the previously submitted information remains applicable.

Review deadline for the application

  • At least 40 business days before initially providing the above services, a financial market participant submits an application, along with the required information, to Latvijas Banka.
  • Within 20 business days of receiving the application, Latvijas Banka assesses whether all required information has been submitted. Should it find that the application is incomplete, Latvijas Banka notifies the applicant of this and sets a deadline for submitting the missing information.

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.

Costs

A financial market participant (except a credit institution, investment firm, central securities depository, or regulated market operator) that is subject to Latvijas Banka's supervision and has obtained authorisation to provide crypto-asset services in accordance with Article 60 of Regulation (EU) 2023/1114, pays Latvijas Banka up to 0.6% (inclusive) of the annual gross income from the provision of crypto-asset services.

Annually, Latvijas Banka establishes the amount of the payment to be made by its supervised financial market participants and defines the procedure for making those payments.

Useful information

Licensing