What Is MiFID II, and Why Does It Matter for Mintos?
MiFID II is the EU investment-firm regulatory framework that governs Mintos. It sets conduct rules, capital requirements and grants access to a EUR 20,000 investor compensation scheme - but does not protect against borrower defaults.
Key points. MiFID II is the Markets in Financial Instruments Directive, a comprehensive EU regulatory framework for investment firms. Mintos operates under a MiFID II licence granted by Latvijas Banka, the central bank of Latvia. This framework imposes conduct-of-business rules, minimum capital requirements, transaction reporting obligations and access to an investor compensation scheme that covers up to EUR 20,000 per investor in the event of firm insolvency - but does not cover borrower defaults on individual loans.
What MiFID II actually is
MiFID II stands for the Markets in Financial Instruments Directive (revised), an EU-wide regulatory framework that took effect in January 2018. It applies to investment firms offering services such as portfolio management, execution of orders on behalf of clients, investment advice and the operation of multilateral trading facilities. The directive replaced the original MiFID framework from 2007 and introduced stricter transparency, reporting and conduct requirements across all 27 EU member states.
A platform holding a MiFID II licence must meet capital adequacy thresholds, maintain client asset segregation, submit regular transaction reports to its national regulator and follow detailed conduct-of-business rules designed to protect retail investors. In Latvia, Latvijas Banka (the central bank) grants and supervises MiFID II licences. Mintos received its MiFID II investment-firm licence from Latvijas Banka in 2020, restructuring its business from a loan-assignment marketplace into a regulated Notes-based investment platform.
The framework does not eliminate credit risk on underlying loans, nor does it guarantee that borrowers will repay their obligations. MiFID II supervises the investment firm itself - its capital, governance, reporting and treatment of client funds - not the creditworthiness of the third-party loan originators whose debt Mintos makes available to investors.
What a MiFID II licence requires from Mintos
Investment firms authorised under MiFID II must comply with a set of ongoing obligations enforced by their national competent authority. For Mintos, supervised by Latvijas Banka, these requirements include maintaining initial capital of at least EUR 730,000 (the threshold for investment firms operating a multilateral trading facility), holding client funds in segregated accounts at authorised credit institutions, and submitting transaction reports covering all executed orders.
Conduct-of-business rules oblige Mintos to act honestly, fairly and professionally in the best interests of its clients. This includes clear disclosure of risks, fees and conflicts of interest; a formal complaints-handling procedure; and an obligation to assess the appropriateness of its services for each retail investor. Mintos must also publish an annual financial statement audited by an external firm and maintain organisational arrangements that prevent conflicts of interest from harming investors.
Latvijas Banka conducts periodic on-site inspections and reviews the firm's compliance with capital, governance and reporting standards. A breach of MiFID II requirements can result in sanctions, restrictions on new business or, in severe cases, revocation of the licence.
The EUR 20,000 investor compensation scheme
One of the most visible benefits of MiFID II authorisation is access to a national investor compensation scheme. In Latvia, the Investor Compensation Scheme covers eligible claims up to EUR 20,000 per investor if the licensed investment firm becomes insolvent and cannot return client assets. This scheme is funded by contributions from all MiFID II-authorised firms in Latvia and applies when the firm itself fails to meet its obligations to investors.
The compensation does not extend to borrower defaults on individual loans. If a borrower behind a Mintos Note stops repaying, the investor bears the credit risk, and the compensation scheme does not step in. The scheme protects investors from the insolvency of Mintos as an entity - for example, if the firm misappropriates client funds or goes bankrupt - not from underperformance or default at the loan-originator level.
Understanding this distinction is central to evaluating what MiFID II actually guarantees. The regulatory framework and the compensation scheme reduce the risk that Mintos itself will mishandle investor money or collapse without recourse, but they do not turn P2P lending into a risk-free asset class. Capital remains at risk of partial or total loss due to borrower defaults, originator failure or adverse economic conditions.
MiFID II compared to other regulatory frameworks
Not all EU P2P platforms operate under MiFID II. Some hold an ECSP licence - the European Crowdfunding Service Provider regime introduced in November 2021 - which is a lighter regulatory framework designed specifically for crowdfunding platforms. ECSP authorisation requires lower initial capital (EUR 25,000 to EUR 50,000, depending on optional permissions), imposes a 5 million euro cap on funding per project per year, and grants a single EU-wide passport to operate across all member states.
ECSP does not include an investor compensation scheme. Platforms under ECSP must follow conduct rules, provide risk warnings and maintain insurance or comparable guarantees, but the capital and prudential requirements are less stringent than those under MiFID II. Some P2P platforms operate with no financial regulator at all, relying on consumer-credit licences, payment-services licences or voluntary trade-association memberships, none of which provide the same supervisory depth or investor protection as MiFID II or ECSP.
A MiFID II licence signals higher compliance costs and a more robust supervisory relationship than ECSP or unregulated status. It does not eliminate investment risk, but it does reduce operational and governance risk relative to platforms with lighter or no regulatory oversight.
| Framework | Authority | Initial capital | Investor compensation | EU passport |
|---|---|---|---|---|
| MiFID II | National financial regulator (e.g. Latvijas Banka) | EUR 730,000+ (multilateral trading facility) | Yes (up to EUR 20,000 in Latvia) | Yes |
| ECSP | National financial regulator (ESMA registry) | EUR 25,000-50,000 | No | Yes |
| Unregulated | None (or consumer-credit/AML only) | Not applicable | No | No |
What MiFID II does not protect you from
MiFID II governs the conduct and capital of the investment firm, not the credit quality of the underlying loans. If a borrower defaults on a loan backing a Mintos Note, the investor holding that Note absorbs the loss unless a buyback guarantee from the originator applies and is honoured. The compensation scheme does not reimburse investors for credit losses, market downturns or poor loan selection.
Similarly, MiFID II does not require loan originators themselves to hold any specific licence or meet any minimum capital standard. Mintos is responsible for onboarding and monitoring originators, but regulatory oversight of those third-party lenders varies by jurisdiction. An originator may operate under a consumer-credit licence, a non-bank financial institution licence or no financial regulator at all, depending on where it is domiciled and what products it offers.
The framework also does not prevent Mintos from charging fees, changing terms or suspending withdrawals under certain conditions, as long as these actions comply with the platform's terms of service and relevant conduct rules. Investors remain exposed to liquidity risk, concentration risk and the risk that regulatory changes in other jurisdictions affect originator operations. MiFID II reduces but does not eliminate the operational risk of investing through Mintos, and it provides no guarantee of returns or capital preservation.
Why Mintos chose MiFID II over ECSP
Mintos restructured its business in 2020 and 2021 to operate under a MiFID II licence rather than pursuing ECSP authorisation, which was not yet available at the time. The MiFID II framework allowed Mintos to offer investment services across the EU with a single passport, continue operating its secondary market and maintain the scale and complexity of its platform without the per-project funding caps that ECSP imposes.
The higher capital requirement and more intensive regulatory relationship under MiFID II also served as a public signal of the platform's commitment to regulatory compliance following originator defaults in 2020. Access to the investor compensation scheme provided an additional layer of protection that ECSP does not include, although this protection remains limited to firm insolvency and does not cover loan-level credit risk.
The choice reflects Mintos' position as the largest EU P2P marketplace by cumulative volume, with over EUR 12.4 billion in loans facilitated since 2015 and a registered investor base exceeding 700,000. A lighter regulatory framework may have been sufficient for a smaller platform, but MiFID II aligns with the scale and cross-border nature of Mintos' operations.
How to verify Mintos' MiFID II status
Latvijas Banka publishes a register of authorised investment firms on its website at bank.lv. Mintos appears in this register under its legal name, Mintos Marketplace SIA, with its MiFID II licence number and the date of authorisation. The European Securities and Markets Authority (ESMA) also maintains a public register of MiFID II firms at registers.esma.europa.eu, where you can search by firm name or country.
Verifying a platform's regulatory status directly with the issuing authority is a basic due-diligence step before committing capital. A licence number alone does not eliminate risk, but the absence of verifiable authorisation where one is claimed is a red flag. Check that the licence type matches the services offered - a payment-services licence or AML registration is not the same as MiFID II or ECSP authorisation.
Capital at risk. MiFID II authorisation does not eliminate the risk of partial or total loss of invested capital. Borrower defaults, originator failures and adverse market conditions remain investor risks. The EUR 20,000 compensation scheme applies only if Mintos becomes insolvent and does not cover credit losses on individual loans.
Frequently asked questions
No. MiFID II supervises the investment firm (Mintos) but does not guarantee borrower repayment or eliminate credit risk on individual loans. The framework reduces operational and governance risk at the firm level but does not prevent loan defaults or originator failures, which remain investor risks.
MiFID II is a full investment-firm framework with higher capital and conduct requirements, including a EUR 20,000 investor compensation scheme in Latvia. ECSP is a lighter crowdfunding licence with lower capital thresholds (EUR 25,000 to EUR 50,000), a 5 million euro funding-per-project cap and no investor compensation scheme. Both grant an EU passport to operate across member states.
No. Platforms offering investment services usually require MiFID II or ECSP authorisation, but some operate without either, depending on how they structure their business and where they are based. Regulatory requirements vary by member state and business model. Always verify a platform's licence status directly with the relevant national authority before investing.
Mintos would be prohibited from accepting new investors or facilitating new transactions. Existing claims may be handled according to national insolvency and investor-protection rules, including the compensation scheme where it applies. Latvijas Banka would supervise the wind-down process to protect client assets to the extent possible under EU law.
Next step. Read how the EUR 20,000 compensation scheme actually works, including what it covers and what it does not, or see the full trust-signal checklist for Mintos to evaluate regulatory status alongside other safety factors.