Pre-application Meeting for a MiCA Licence in Latvia. What Should the Founders Discuss with the Regulator?

A crypto business considering MiCA licence in Latvia may face several decisions before it is ready to submit an application. The founders need a company, management, funding and arrangements with service providers. Some of those commitments would be expensive to reverse if the proposed structure later needs to change.

Speaking to the regulator before making them can therefore be useful. Latvijas Banka offers pre-licensing consultations and says that the company does not necessarily have to be legally established at the familiarisation stage.

The discussion still needs a sufficiently developed proposal. The founders may not have signed every agreement or appointed every employee, but they should be able to explain the business they intend to establish. The regulator needs to distinguish an arrangement that already exists from one still being negotiated.

For the founders, the preparation involves deciding what they know, what remains open and which questions they want the consultation to address.

The company does not have to exist before the first discussion

Consider a Polish crypto business planning to establish a company in Latvia. Its platform is operating, its developers work in Poland and the founders want to retain the existing brand. They have not yet incorporated the Latvian applicant or agreed its final ownership structure with an investor.

Latvijas Banka’s guidance allows the familiarisation stage to begin before legal establishment. The founders could therefore discuss the proposed business without first registering a company.

They would nevertheless need to collect information about the intended shareholders and officials, initial capital and origin of funds. The guidance also asks for the business model, selected services, transaction flows, technical solutions and customers.

The distinction matters. A company that has not been incorporated may still have a well-developed operating plan. A registered company may have little more than an address and a shareholder.

In our example, the founders could explain the proposed investment and identify the appointments they are considering. If the investor’s participation remains conditional, that should be stated. The initial discussion does not become more useful because an unfinished arrangement is presented as settled.

The existing platform is only part of the proposal

The founders may know their product well enough to demonstrate it without preparation. That does not necessarily explain the service the Latvian applicant will provide.

A customer might place an order through the platform while several companies participate behind the interface. One receives the funds, another supplies liquidity and an external provider holds the crypto-assets. The application will need to distinguish those roles.

Latvijas Banka asks prospective applicants to describe their selected services and the procedure for providing each one. It also asks how transactions will flow.

For the business in our example, the explanation should identify the company that contracts with the customer and follow the transaction through the parties involved. It should show what the applicant does itself and what it obtains from another company.

Using the group’s trading name throughout can make a presentation easier to read while leaving those relationships unclear. The regulator needs to understand the proposed legal and operational arrangement, not just the customer experience.

The founders should also separate services intended for launch from features they may introduce later. A possible future product should not obscure the business being prepared for authorisation.

A transaction flow can reveal what has not been agreed

A diagram may show an external provider receiving instructions from the Latvian applicant. The founders should check whether that relationship exists or is merely intended.

Suppose the Polish company already uses a custody provider. The founders expect to retain it after establishing the applicant, but the provider has not agreed to serve the Latvian company. The transaction flow should not imply that this part of the arrangement is complete.

The materials can identify the current agreement, explain the proposed change and state what remains to be negotiated. The regulator can then consider the proposal on that basis.

The same exercise may reveal uncertainty about funds, records or customer communications. Which company receives a complaint about a failed transaction? Who can obtain the information needed to investigate it? Does the applicant have direct access, or must it ask the existing business for help?

These questions may require commercial decisions before they can be answered in the application. Identifying them during preparation leaves the founders time to make those decisions.

A diagram is useful when it exposes the arrangement. It is less useful when it smooths over a missing agreement by drawing an arrow between two companies.

Ownership and funding need to be considered together

Latvijas Banka includes shareholders, initial capital and the origin of funds among the information to prepare during familiarisation.

For a business seeking investment, those subjects may still be changing. One founder may intend to contribute personal funds while an investor provides the remainder through a holding company. The investor’s contribution may depend on agreed terms or a later event.

The ownership chart and funding explanation should describe the same proposal. A chart showing only the founders would be incomplete if the funding plan depends on another shareholder joining.

The materials should also distinguish funds already available from money expected later. An expression of interest, a signed commitment and a completed transfer describe different positions. Calling all three «secured funding» would make it harder to assess what the business can actually do next.

If the founders have not settled the investment, they can explain the alternatives under consideration. They should identify which parts of the preparation depend on the outcome, including recruitment or agreements the applicant cannot yet finance.

The purpose of the initial discussion is not to make the funding appear complete. It is to provide an accurate account of how the proposed business will be established.

Management plans need more than names

A proposed director’s name tells the regulator who may hold office. It does not explain what that person will manage.

In our example, the founders may intend to appoint a director in Latvia while retaining much of the existing operation in Poland. The preparation should show how the director will work with that operation and which decisions will belong to the applicant’s management.

If the director is expected to supervise developers, what access will they have to the team? If they are responsible for a provider relationship, can they require information or authorise expenditure within their remit?

These questions are relevant before the full application is drafted. The answers may affect employment arrangements, service agreements and the applicant’s budget.

An appointment still under discussion should be described as proposed. Where recruitment has not begun, the materials can identify the role and its intended responsibilities without suggesting that a person is already available.

The founders should be clear with each other as well. A director expecting operational authority and a founder expecting to approve every decision may be preparing different versions of the same company.

Existing group resources need an arrangement behind them

The Polish business may already employ the people and own the systems needed by the applicant. Retaining those resources may be commercially sensible. The question is how the Latvian company will obtain the work and information it needs.

A presentation referring to «our developers» or «our compliance team» may conceal which company employs them. The initial materials should make that distinction visible.

Suppose the Latvian manager needs a system change while the Polish company has assigned the developers to another project. The founders need to decide how the applicant’s request will be handled. Will the agreed service include access to development capacity, or will each request depend on a fresh decision?

The consultation can address the proposed allocation of responsibilities. It cannot replace the agreement the companies need to reach.

For the founders, describing the arrangement early may reveal that they have relied on informal cooperation in the existing business. That cooperation needs to be translated into a structure the applicant can explain and operate.

Draft documents should reflect the proposal being discussed

Latvijas Banka’s guidance envisages the entrepreneur starting to draft the necessary documents during preparation. It treats the formal application as a separate stage.

The founders do not need to produce a complete policy pack merely to make the first discussion possible. Some drafts may nevertheless help explain an arrangement or expose a problem.

A governance document might give the Latvian director authority over operational spending while the proposed approval process reserves every payment for the founders. A service agreement might promise support without explaining how the applicant can obtain it.

Those differences need decisions. Making the wording consistent will not resolve them if the organisation still works another way.

Where terms remain under negotiation, the documents should say so. A draft agreement should not be presented as an available service simply because the application will eventually need one.

The useful material is the material that helps the regulator understand the proposal. Length alone does not make an unfinished structure easier to assess.

The questions should identify what the founders need to resolve

A broad question such as whether compliance can remain abroad may cover several activities and several possible reporting arrangements.

The founders should describe the work they intend to place outside the applicant, the person responsible for overseeing it and the decisions that person will retain. The question can then address the proposed division rather than an undefined function.

The same approach applies to technical providers and staffing. If two models are being considered, the materials can explain both and identify the difference that matters to the business.

Some questions will concern the meaning of a requirement. Others will arise because the founders have not chosen an operating model. The regulator can discuss the relevant framework, but the commercial choice remains with the business.

Preparing a short list of questions before finalising the presentation can help. It shows whether the information needed for the discussion is actually included or buried beneath product features and market forecasts.

The people attending need a shared understanding

Advisers can organise the materials and help formulate regulatory questions. The founders and proposed managers still need to understand the business being presented.

Following one ordinary transaction through the proposed organisation is a useful preparation exercise. Following a service failure may reveal more.

Who contacts the provider? Who can require further work? Who obtains the records, and who decides how to respond to the customer?

This is a practical check, not an additional attendance requirement stated in the published guidance. It can expose differences between the people preparing the application.

If the adviser describes an independent Latvian manager while the founder expects all instructions to pass through Poland, the presentation needs more than editing. The founders must settle which arrangement they intend to establish.

It is better to discover that difference before the meeting than to offer conflicting explanations during it.

An initial assessment is not an authorisation decision

Latvijas Banka describes pre-licensing as advice and an initial assessment of compliance and readiness to proceed. The formal application remains a separate stage.

An encouraging discussion should therefore not become an internal statement that the business model has been approved. Feedback may concern a particular issue or depend on the version of the proposal presented.

Suppose the discussion assumes that the applicant will contract directly with customers. The founders later decide that another group company will hold that relationship. They should not assume the earlier feedback covers the revised arrangement.

A written record should identify what was discussed, any further information requested and the matters left open. It should distinguish the regulator’s feedback from conclusions the founders reached afterwards.

That record is particularly useful when several people are working on different parts of the application. They need to know which assumptions remain current and which have changed.

Leave time to act before filing for a MiCA Licence in Latvia

Latvijas Banka offers pre-licensing consultations free of charge, online or on-site. It has also said that there is no limit to the number of consultations and meetings. Its CASP guide gives a consultation response time of up to 30 days, depending on the volume and complexity of the questions.

The founders should allow time both for the response and for the work it may prompt.

A transaction flow can be revised quickly. A management appointment, investment or provider agreement may take longer. Arranging the first substantive discussion immediately before the intended filing date leaves little room for changes of that kind.

After the consultation, each outstanding matter needs someone responsible for resolving it. If the proposed arrangement changes, the relevant documents should change together. Updating a presentation while leaving the transaction flow or service agreement untouched creates different accounts of the business.

The opportunity to speak before incorporation is valuable because the founders still have room to act. They can examine the proposal before committing to arrangements that may be costly to reverse.

They do not need every answer at the first meeting. They should leave knowing which decisions remain theirs to make and what work is needed before the application can describe a functioning company.