According to the 2023 “Financial Stability Report” by Latvijas Banka, the number of individuals purchasing crypto assets in Latvia has witnessed a decline.
The central bank attributes this drop in interest to various factors, including negative sentiment stemming from fraud and insolvency issues among major players in the market, unwise investment decisions that have been made previously, and the association of cryptocurrencies with money laundering.
Furthermore, the report points out the increasing involvement of crypto-asset companies with supervised financial sector participants, which has added to the waning interest in cryptocurrencies.
Based on data from payment card usage, the report reveals that in February 2023, only 4% of the population had bought crypto assets, compared to 8% in the previous year.
It is important to note that Latvia has a total population of 1.84 million people.
The report also sheds light on the declining transfer of funds to crypto wallets from Latvia. In 2022, Latvians transferred 51.8 million euros ($57 million) to crypto wallets, but this figure dwindled to 10.7 million euros ($11.8 million) in the first quarter of 2023.
Most of these transactions were directed towards companies based in other European countries, particularly in those countries where the fintech ecosystem, including crypto technologies, is flourishing. Notable examples include Lithuania, Estonia, Malta, and Ireland.
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The report contrasts Latvia’s crypto adoption ranking with that of its neighboring country, Lithuania. According to the “2022 Geography of Cryptocurrency Report” by Chainalysis, Latvia was ranked 92nd out of 148 countries in terms of crypto adoption, while Lithuania secured the 102nd spot.
The Latvian central bank acknowledges that its nonbank financial sector is relatively less significant compared to other European countries.
This is mainly attributed to the population’s lower level of long-term savings, which have accumulated over a shorter period compared to many other euro area nations.
Despite the declining interest in crypto assets for investment purposes, the report highlights that retail crypto payments continue to dominate in Latvia.
However, these payments are typically small in size, with 44% of retail payments worth 60 euros ($66) or less, and 97.5% valued at under 1,000 euros ($1,100).
However, the specific monetary value of these transactions was not provided in the report.
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