In a recent study, the Central Bank of Latvia, Latvijas Banka, revealed that the country’s interest in crypto assets has been waning. The revelation, made in the 2023 “Financial Stability Report,” indicates that the crypto craze seems to be calming down within Latvia’s borders. It is important to know that the decline in interest has been attributed to several factors, the key among them being fraud and insolvency issues tied to major market participants and unwise investments that have been made in the crypto space. Another important factor is the enhanced regulation of crypto-asset companies, which is heightening apprehension among potential and current investors.
Latvijas Banka’s findings are based on payment card usage data, which shows a reduction in crypto asset purchases from 8% of the population in 2022 to 4% in February 2023. With a population of 1.84 million, this shift illustrates a significant change in financial behavior among Latvians.
Changes in investment dynamics and crypto adoption rankings
There has also been an apparent change in the volume of transfers to crypto wallets, which fell from 51.8 million euros ($57 million) in 2022 to 10.7 million euros ($11.8 million) in the first quarter of 2023. Again, the majority of these crypto wallets are hosted in countries such as Lithuania, Estonia, Malta, and Ireland, known for their buoyant financial technology ecosystems.
Latvia’s nonbank financial sector has been highlighted as less significant than other European countries. This is primarily due to the lower levels of long-term savings among the population.
Nevertheless, retail crypto payments continue to prevail over crypto asset investment in the country, even though the amounts are characteristically small. Approximately 44% of retail payments made using crypto were worth 60 euros ($66) or less, and a remarkable 97.5% were for under 1,000 euros ($1,100).
According to the “2022 Geography of Cryptocurrency Report” by Chainalysis, Latvia was ranked 92nd among 148 countries in terms of crypto adoption. Meanwhile, Lithuania, which is Latvia’s neighbor, was ranked 102nd.
