Ellex Baltic Fintech Legal Outlook 2025: navigating new regulatory landscapes

Ellex Baltic Fintech Legal Outlook offers a comprehensive overview of the most significant legal developments and market trends expected to shape the fintech sector in Estonia, Latvia and Lithuania during 2025. Involving insights from leading legal experts in fintech, this publication highlights key regulatory changes (including MiCAR, DORA, FiDA, PSD3/PSR, CCD II, AI Act) as well as country specific initiatives, and elaborates on their impact to the local fintech markets. 

Estonia, Latvia and Lithuania have developed sophisticated and vibrant fintech sector and are go-to jurisdictions for internationally known market participants. While Estonia and Lithuania have sustained their position as key fintech markets for some time, Latvia is also actively reclaiming its spot among leading European fintech markets.

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Estonia: a tech-savvy fintech haven

Estonia enters 2025 as one of the key markets for fintech companies with its robust digital infrastructure and thriving startup culture.

“Well-developed tech sector has played a key role in attracting fintech companies and new innovative solutions to Estonia and, therefore, for shaping the fintech sector. Estonia has kept its vibrant environment for innovative solutions also by refraining, in most parts, from overregulating the fintech sector with additional level of interstate legislations. During 2025 fintech companies in Estonia, as in other EU member states, will continue to be affected by new and more stringent regulations either imposing licensing obligations or insisting a review of existing operations. This requires fintech companies to have a good overview and a clear plan for adopting new requirements in order to stay compliant. In this continuous wave of new regulations it is important that Estonia, as technology flagship, keeps showing as an example of open mind towards digital innovation in financial sector,“ writes Anneli Krunks, Head of Fintech at Ellex in Estonia.

In 2025 the main focus will most likely remain on MiCAR and DORA.

• In the light of MiCAR becoming applicable in the end of 2024, it can be expected that Estonian VASPs will start with CASP licensing already in 2025 despite long transition period in Estonia (until 1 July 2026). This would be mainly driven from the fact that the CASP license can be passported throughout the EU and would allow businesses to expand without regulatory uncertainty. However, it shall remain to be seen how many companies intend to obtain the CASP license under MiCAR in Estonia on a first-time basis.

• As DORA became applicable in January 2025 and it is expected that the monitoring on compliance with DORA by the competent authorities will become more active in 2025. It is therefore wise for fintech companies to prepare beforehand for such inquiries.

As to the other regulations, 2025 will also shed some light on the plans of transposing CCD II to the Estonian legislation. From the Estonian perspective the CCD II shall play an important role in reshaping the BNPL market in Estonia as the CCD II narrows the scope of BNPL schemes out regulatory scope. Also, in the light of adoption of the EU AML Package, which will have significant effect on the Estonian interstate legislations, it can be expected that the legislator and competent authorities will soon start with the implementation process. The payment and e-money institutions in Estonia are eagerly waiting the release of the new versions of PSD3 and PSR.

Latvia: reclaiming its fintech leadership

After years of plateau, Latvia is striving to become a top fintech destination in 2025, supported by strong political backing and innovative regulatory initiatives.

“Latvia is taking steps to establish itself as a key player in the fintech landscape. Thus, financial supervisory authority – the Latvijas Banka, has opened its retail payments system to fintech, as well as has put in place attractive support mechanisms such as the Innovation Centre and Regulatory Sandbox. We have also seen strong support from politicians, who were willing to adopt the law setting forth arguably the most attractive CASP supervisory fees in the region and introduce amendments to existing laws allowing payment of share capital in crypto. On top of that, we have the availability of a highly skilled tech workforce, relevant educational programmes, well-established startup ecosystem, and robust digital infrastructure,” writes Zane Veidemane – Berzina, Associate Partner at Ellex in Latvia.

In 2025 the focus will most likely remain on MiCAR and DORA.

• In the light of MiCAR becoming applicable in the end of 2024 and transition period ending on June 30, 2025, Latvian VASPs are expected to start licensing process shortly. Considering the attractive supervisory fees and supportive attitude of the supervisory authority Latvijas Banka, it is expected that VASPs from other jurisdictions will also consider licensing in Latvia rather than in their current countries of registration.

• As DORA became applicable in January 2025, it is expected that the monitoring on compliance with DORA by the competent authorities will become more active in 2025. It is therefore advisable for fintech companies to prepare beforehand for inquiries by the competent authorities.

As to the other regulations, considering the dense presence of non-bank lenders in Latvia, we can undoubtedly expect that transposition of CCD II in Latvia will be in the spotlight despite consumer lending already being very strictly regulated in Latvia. Preparation for application of the EU AML package should also be closely monitored by fintech as establishment of aligned rules and supervisory practices across the EU might result in positive changes locally in Latvia.  

Most importantly, though, the fintech companies should actively engage in preparation of the new Latvian FinTech Strategy. The process is coordinated by Latvijas Banka, with the first draft expected by end of Q1 2025.

Lithuania: a resilient fintech ecosystem

Lithuania remains as one of the key players in the European fintech landscape, boasting a high concentration of licensed electronic money institutions and payment service providers. On the other hand, supervisory initiatives and guidance oftentimes precede the regulatory framework in the EU.  As MiCAR approaches implementation, Lithuania’s fintech companies are adapting to new regulations while balancing compliance requirements for 2025 with ongoing innovation.

“Lithuania is actively aligning its regulatory framework with MiCAR, allowing current VASPs one of the shortest grandfathering periods to operate under existing licenses until July 1, 2025. CASPs must meet enhanced governance and operational resilience requirements, establish a substantial local presence, and navigate a competitive licensing process. The Bank of Lithuania has published clear guidelines for CASP licensing, encouraging early applications, “ writes Ieva Dosinaitė, Partner at Ellex in Lithuania.

DORA, fraud prevention and even upcoming implementation of the EU AML package set the key challenges for the year. Fintech companies should monitor introduced regulations and proposed amendments closely.

CCD II will reshape the BNPL market in Lithuania, requiring companies to obtain consumer credit provider licenses and apply the same requirements to BNPL clients as to ordinary consumer borrowers. The directive aims to strengthen consumer protections while fostering a level playing field, challenging existing business models and demanding operational adjustments.

About Ellex

Ellex is a leading law firm in the Baltics, providing comprehensive legal services to fintech companies and other business sectors. With a client-focused approach and unparalleled industry knowledge, we empower businesses at the forefront of innovation to thrive in an ever-evolving digital economy. Ellex stands out with its deep expertise and proven track record in navigating the complex legal landscape of fintech, digital assets and IT law.

As our clients say, the team stands out as a premier option in the market, described as “one of the largest specialised fintech teams, having exceptional expertise and attention to details. Its fintech legal team has the full capacity and know-how to handle complicated legal issues.