Walless is a leading business law firm operating in all three Baltic states. The firm’s name is a play on its no-barriers approach to business, i.e., “wall-less”. It serves businesses in all major sectors and is known for its financial regulatory expertise, proven by six successful bank licensing projects and numerous other regulatory mandates.
NFM caught up with one of the law firm’s Partners, Joana Baublytė-Kulvietė, to understand what fintech trends currently dominate the Baltics:
Trend 1: The Baltics are now established as a Fintech hub
The entire Baltic zone is now well-established as a tech and fintech hub. Estonia has its history of tech unicorns (Skype, Bolt, Wise, etc.) and is usually the choice for tech startups. Lithuania began the fintech drive and has become a mature fintech ecosystem, attracting global players such as DriveWealth and Vinted, the latter having established an EMI in Lithuania to facilitate its platform payments. Latvia is now firmly coming into play, proving especially appealing to crypto and digital asset players.
Lithuania has matured as a fintech hub. Whereas it was once the place to go for fast licensing, the regulator now scrutinises applications more stringently. “Fintech has gained immense market share in Lithuania, and the focus is now on quality rather than quantity,” says Joana. “We see this as a natural progression of a maturing landscape.”
Last chance: Get your tickets for Baltic Fintech Days May 13
Trend 2: Increased M&A interest in Lithuania instead of direct licensing
Lithuania’s new market entrants are appearing mostly through M&A instead of direct licensing. Two notable M&A deals are Checkout.com’s acquisition of Blue EMI, a Lithuanian EMI; and Santander-backed Ebury’s acquisition of ArcaPay, a Lithuanian payments company.
“The growth of M&A deals reflects the sector’s maturity,” says Joana. “Strategic acquisitions provide the entrant with both the license and the business itself, allowing it to start scaling immediately, thus adding value to the area.”
M&A also relieves pressure from regulators to issue licenses, as it indicates a sector that’s sufficiently developed to attract solid investment.
Trend 3: MiCAR has cleaned out non-serious players
Europe’s MiCAR (Markets in Crypto-Assets Regulation) is cleaning up house while also firmly establishing serious players.
“Crypto players must adjust their mindset and operations from unregulated to regulated, and they need licenses for that,” says Joana. “They typically explore both Lithuania and Latvia, but both jurisdictions require full compliance, thus squeezing out non-serious players.”
Trend 4: TradFi is more interested in crypto, especially stablecoins
The other side-effect of MiCAR is an interest in stablecoins by incumbents as traditional financial institutions look to incorporate a crypto angle into their business models. Walless knows of several large players looking to offer the opportunity for clients to settle in stablecoins instead of fiat.
“We expect to see more of this interest in both Lithuania and Latvia moving forward,” says Joana. “The crypto angle is definitely hot.”
Last chance: Get your tickets for Baltic Fintech Days May 13
Trend 5: Compliance challenges remain a primary factor
Compliance issues remain an ever-present challenge, and this is not particular to the Baltics. It’s a Europe-wide issue.
“MiCAR is an enormously complex piece of legislation,” says Joana. “PSD3 is also on its way, and we’re expecting a new framework for AML.”
In short, fintech is a regulated business, and compliance efforts are significant, making the choice of jurisdiction crucial for startups. Fintechs typically approach a firm like Walless, with offices in all three Baltic states, to understand which country might be best-suited to the company’s structure and goals.
“Unfortunately, using AI to apply for a license isn’t going to cut it,” says Joana. “We’ve already seen that happen, and those applications are immediately rejected because they’re simply not up to standard.”
