The number of people buying crypto assets in Latvia is declining, Latvijas Banka said in its 2023 “Financial Stability Report."

The central bank attributed the falling interest in crypto to negative sentiment linked to fraud and insolvency among major market participants, “unwise” investments that have already been made, crypto’s links to money laundering and “the increasing link of crypto-asset companies to the supervised financial sector participants.”

Basing its findings on payment card usage, the bank said 4% of the population had bought crypto assets in February 2023, compared with 8% in 2022 overall. Latvia has a population of 1.84 million.

"The number of the people purchasing crypto-assets as well as making payments with payment cards to invest in crypto-assets in Latvia declines. This can be explained by global developments such as the negative sentiment of investors, detected cases of fraud and cases of… pic.twitter.com/uOIbJvIlsi

— Joshua Rosenberg (@_jrosenberg) August 4, 2023

Latvians transferred 51.8 million euros ($57 million) to crypto wallets in 2022, with the pace slowing to 10.7 million euros ($11.8 million) in the first quarter of 2023. Most of those accounts were with companies in European countries “where the ecosystem of new financial technologies (including crypto technologies) is developing buoyantly,” such as Lithuania, Estonia, Malta and Ireland.

Latvia was ranked 92nd out of 148 countries by crypto adoption by Chainalysis in its "2022 Geography of Cryptocurrency Report." Its neighbor Lithuania was ranked 102nd. The Latvian central bank noted that the country’s nonbank financial sector “is still considerably less important” than those in other European countries:

“This is primarily due to the low level of long-term savings of the population: in Latvia they have accumulated over a shorter period of time compared to many other euro area countries.”

Retail crypto payments “continue to prevail” over crypto asset investment in the country, the report said, although they are characteristically small. Forty-four percent of retail payments made using crypto were worth 60 euros ($66) or less, and 97.5% were for under 1,000 euros ($1,100). The report did not specify the monetary value of those transactions.

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