Latvia is preparing a regulatory framework for tokenizing real-world assets, with commercial property as the envisioned entry point. The economy minister targets adoption in the first half of 2027, but the government timetable is already behind schedule and the political outlook remains uncertain. Here is a look at the ambitions, the obstacles and the European context.
🔑 Key takeaways
- Economy Minister Viktors Valainis targets tokenization rules for real-world assets in the first half of 2027.
- Commercial property is seen as a good entry point, and crypto could be used to buy or sell companies or invest in real estate.
- The market for tokenized real-world assets, stablecoins excluded, stood at between $38 billion and $48 billion in September 2026.
- The timeline has slipped, and anti-money laundering obligations remain the main concern.
A political ambition with an uncertain timeline
In an interview with CoinDesk at the UN:BLOCK fintech conference in Riga, Economy Minister Viktors Valainis said a regulation could be in place in the first half of 2027. The rules would govern the tokenization of real-world assets, meaning the representation on a blockchain of an asset or of rights attached to that asset. The Ministry of Economy is working on the project with the central bank, the Ministry of Finance and industry representatives, with the aim of building a framework that attracts investment.
Valainis believes the subject should remain on the agenda of the next government, as the country forms a new administration after its elections. That continuity matters because the original schedule has already slipped. Point 20.5 of the government action plan set October 1 as the deadline for the Ministry of Economy to prepare an assessment of the legal changes needed to tokenize real estate and other assets. Asked about the status of that work, Valainis said it was still “ongoing”. His party won no seats in the October elections, adding political uncertainty to a timetable that is already behind.
The minister also raised the possible use of cryptocurrencies to buy or sell companies, or to invest in real estate, without detailing the mechanisms envisaged. The potential economic benefit has not yet been quantified. His case rests on attracting international companies, investment and additional tax revenue.
A young reference market
The global backdrop explains the growing interest of authorities. Tokenization of real-world assets has moved from a specialized experiment to a fast-growing segment. According to the legal guide reviewed, the market rose fivefold, from about $5 billion in 2022 to roughly $24 billion by mid-2025. In early 2026, the value of tokenized real-world assets, stablecoins excluded, was between $25 billion and $30 billion, while the broader market, including fiat-backed stablecoins, exceeded $320 billion.
September 2026 estimates vary with the counting methodology. The table below compares the main figures cited.
| Indicator | Value | Source |
|---|---|---|
| Tokenized real-world assets, stablecoins excluded (Sept. 2026) | $38B to $48B | Range across trackers |
| Mid-September 2026 estimate | about $47.6B | Token Terminal |
| September 2026 estimate | $38B to $39B | RWA.xyz |
| Tokenized market, mid-2025 | about $24B | Legal guide |
| Tokenized market, 2022 | about $5B | Legal guide |
| Broader market with stablecoins (early 2026) | over $320B | Legal guide |
| Consulting firm projection for 2030 | about $2,000B | Consulting firms |
RWA.xyz, which tracks fewer asset categories, puts the market between $38 billion and $39 billion, while Token Terminal estimated about $47.6 billion in mid-September. The gap reflects different scopes rather than a disagreement on the trend. The $2 trillion projection for 2030, put forward by consulting firms, should be read as a scenario rather than a reliable forecast.
Existing rules, no unified RWA law
The legal guide stresses that no unified “RWA law” exists in any given jurisdiction. Projects must apply a patchwork of existing rules covering securities, commodities, investment funds and banking, which creates significant legal uncertainty. A token does not automatically confer legal ownership of a property: transfers may still require notarial deeds or updates to the public register.
Projects frequently use a special purpose vehicle, or SPV, to hold the asset and issue the tokens. That structure, however, exposes token holders to bankruptcy risk, mismanagement and the subordination of their claims. Projects that generate passive income may also fall under rules for securities, funds or asset managers. Cross-border projects must comply with the rules of every jurisdiction where their investors reside.
Platforms that buy or sell these tokens are likely to face know-your-customer, anti-money laundering and counter-terrorist financing obligations. This is precisely the point the Latvian government places at the top of its concerns.
“We do not want to create something with a big boom and then a big crash.”
Viktors Valainis, Economy Minister of Latvia
According to the minister, the government will only adopt solutions once it is “1,000% sure” they are transparent and understandable. Working groups and pilots already involve members of the Latvian Blockchain Association, which aims to make Latvia a major Web3 hub within the European Union. Valainis did not name any individual commercial partner. Among the association’s members are the exchanges Kraken and Backpack EU, the fintechs Indemo, Capitalia and Twino, and the airline airBaltic.
The European context: ESMA, the Eurosystem and precedents
Latvia is moving within an evolving European framework. The European Securities and Markets Authority (ESMA) has made artificial intelligence and tokenization two supervisory priorities for 2027. It is working with national authorities on how banks and other financial service providers use these technologies, while protecting consumers and investors. ESMA says it will remain “flexible” in the face of future technological change, including advanced frontier AI.
The most cited European precedent is Slovenia, which issued €30 million in digital sovereign bonds in July 2024 as part of a European Central Bank experiment. Latvia has not announced an equivalent issuance, nor a timetable or amount for its own bonds, even though tokenizing government bonds appears on its “priority list”. Asked how long it would take to tokenize bonds and real estate once the rules are adopted, Valainis replied: “I would say the first part of next year. It could be done.”
Market infrastructure is advancing too. According to the legal guide, the Eurosystem began settling tokenized securities in central bank money on September 21, 2026, while the European Union is negotiating a larger DLT (distributed ledger technology) pilot regime. Latvia’s case therefore fits a double movement: specific rules for real-world assets, and the integration of these instruments into existing financial markets and infrastructure.
The Latvian backdrop is not new. In May 2025, Valainis said that about 40 companies were seeking authorization under the EU’s MiCA regulation, with approvals expected within a month. The same programme included a study on paying personal taxes in cryptocurrency. The government approved a tax payment plan, but its technical integration with payment providers was still pending at the time of the conference, and no provider or accepted cryptocurrency type had been specified.
The expected benefits of tokenization are well known: liquidity, market access, transparent ownership tracking, faster settlement, automated income distribution and the ability to hold a fraction of an asset. A systematic review published on September 26, 2025 in the International Journal of Strategic Property Management, which analysed 75 peer-reviewed articles, identifies three main obstacles: technological risk, regulatory fragmentation and organizations’ reluctance to adopt decentralized asset structures.
Conclusion: three scenarios for 2027
The central scenario is a Latvian regulation adopted during the first half of 2027, with commercial property as the first perimeter. It assumes the next government takes up the file and that the ministry completes the legal assessment that is now overdue. A delay is equally plausible, given that the minister’s party won no seats in the October elections and that anti-money laundering requirements are complex.
A more optimistic third scenario would see Latvia become a European testing ground for tokenized government bonds, building on the Slovenian precedent and the Eurosystem’s infrastructure. Conversely, tougher anti-money laundering requirements could slow projects down. In every case, the economic value remains to be quantified, and legal clarity will be the decisive factor.
Sources
- CoinDesk, Latvia targets tokenization rules in 2027, October 25, 2026
- International Journal of Strategic Property Management, systematic review on tokenization, September 26, 2025
- Compliance Week, ESMA supervisory priorities for 2027
- Cryptonews, legal news on tokenization
- Buzko Legal, legal guide to real-world asset tokenization
- KuCoin News, Latvia eyes 2027 for crypto tax payments
This article is published for informational and educational purposes only. It does not constitute investment advice. Do your own research (DYOR) before making any decision.
