David - Cryptocurrency Enthusiast
In the latest cryptocurrency news, according to the 2023 "Financial Stability Report" released by Latvijas Banka, the interest in cryptocurrency investment and crypto asset management among the Latvian population has experienced a significant decline. The central bank's findings revealed that the number of people buying crypto assets decreased due to various factors, including negative sentiments arising from fraud and insolvency incidents involving major market participants.
The report indicated that in February 2023, only 4% of the population had purchased cryptocurrencies, compared to 8% in the previous year (2022). The decline was attributed to several reasons, including past "unwise" investments, concerns regarding money laundering associated with digital assets, and the increasing connections between crypto-asset companies and regulated financial sector participants.
Latvia, with a population of approximately 1.84 million, witnessed a decrease in the transfer of funds to crypto wallets. In 2022, Latvians transferred a total of 51.8 million euros ($57 million) to crypto wallets, but this pace slowed to 10.7 million euros ($11.8 million) in the first quarter of 2023. Most of these transfers were directed towards companies in European countries where the fintech ecosystem, including crypto technologies, is thriving. Notable examples include Lithuania, Estonia, Malta, and Ireland.
Chainalysis, in its "2022 Geography of Cryptocurrency Report," ranked Latvia 92nd out of 148 countries in terms of crypto adoption, while its neighbour Lithuania ranked 102nd. The central bank acknowledged that Latvia's nonbank financial sector is relatively less influential compared to other European countries. This is primarily due to the population's lower level of long-term savings, which have been accumulated over a shorter period compared to many other euro area countries.
Despite the decline in cryptocurrency investment, retail crypto payments continue to dominate in the country, with small, characteristic transactions. As per the report, 44% of retail payments made using cryptocurrencies were worth 60 euros ($66) or less, and an overwhelming 97.5% were valued at under 1,000 euros ($1,100). However, the exact monetary value of these transactions was not specified in the report.