Trade and store crypto
Can I buy Bitcoin and cryptocurrency in Latvia? The short answer is yes.
An introduction to Bitcoin and cryptocurrency trading in Latvia
Latvia, is a thriving fintech country and a strong regional hub for startups in finance, many of them among the fastest growing in Europe. The blockchain community is thriving, and the country has a traditionally strong finance sector in Riga with a well-developed digital infrastructure; and a tech-friendly and receptive institutional outlook.
Bitcoin, and cryptocurrencies generally, was readily accepted right at the outset in Latvia whose fintech-savvy population and ambitious financial community took it to heart. While it was never going to be legal tender in this switched-on Baltic state it was deemed a legitimate means of exchange complete with a set of cryptocurrency regulations to address risks but also realize the wider potential of blockchain and cryptocurrencies to the economy.
The means of exchanging crypto gains could be taxed, yet no VAT was applicable on crypto purchases of goods and services in Latvia, but much has developed in the crypto space since Bitcoin burst onto the scene. Latvia, like so many countries, is learning from analytical assessment of cryptocurrency and blockchain over the years to update its regulatory framework – something which is ongoing in all states across the world, of course.
Latvia, a touch belatedly compared to others, is attempting to strengthen its AML laws and regulations. As part of the EU, however, Latvia is looking closely at the huge moves on crypto regulation which are being developed in Brussels. Passing regulations that are out of step with forthcoming developments would be counterproductive.
That said, the country is only too aware of the need for updated regulations in the area of combatting money laundering and terrorist financing. There is also progress on the issues of consumer protection that have undoubtedly been spurred on here, and across the world, by the shenanigans of the FTX collapse – the ramifications of which have yet to be fully played out.
Also on the cards is an enhanced framework for the supervision of VASPs – virtual asset service providers – including exchanges, but also digital wallet service providers. Once again, such legislative moves will be in tandem with the EU.
A Latvian CBDC?
Latvia’s early activities with digital payments were described as the eurozone’s first instant payments system and compliant with the Single Euro Payments Area (Sepa) project way back in 2017. This early groundbreaking operation would suggest the country is more than keen on the possibilities of a CBDC.
Up until now, Lativa has been more than happy to play a part with a number of other countries including Spain, Germany, and Italy, in a joint exploration of the technical capabilities of blockchain-based central bank digital currency (CBDC).
The challenges facing CBDCs are being analyzed everywhere, but the testing of payments between digital euro users from Estonia, Latvia, Lithuania, and Spain highlighted the ability to pay some 300,000 simultaneous payments a second. In Latvia, much of the development and analysis is ongoing, as in many EU countries including Spain and France that have conducted wholesale CBDC trials.
Bitcoin mining in Latvia
Latvia’s a crypto-friendly country and with a supply of relatively low-cost electricity, there’s plenty of Bitcoin mining. Some estimates put the volume at some 1% of Latvia’s GDP a few years back when the price of Bitcoin was riding high – oh yes and the cool climate keeps those circuits cool too so there’s another reason not to do it. With bitcoin’s price having slumped during 2022 but now rising healthily, and with the endorsement of the government for bitcoin, there’s no reason to suppose mining won’t continue to grow apace.
Taxes in Latvia
Bitcoin taxation Latvia
Some countries slap a low fixed rate tax on crypto gains in order to increase the tax take, some offer tax concessions, and some increase the tax rates for crypto gains but in all cases, it has to be legitimized to some degree before governments can start raking in tax.
Early on Latvia deemed cryptocurrencies as a legal means of exchange, inevitably meaning that taxation would follow. And it did – with revenues from crypto trading subject to personal and corporate income tax including a flat income tax rate of 23%, with incomes from dividends and interest taxed at 10 15% and tax due on capital gains from shares, real estate, and intellectual property. Although the standard rate of Value Added Tax is 21%, financial transactions are VAT exempt.