Cryptocurrency business

Legislation on cryptocurrency business operations in Serbia

December 14, 2018 by Nebojša Stanković

Today cryptocurrencies have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies that are being set in Serbia and abroad are aware of its importance.

Introduction

Cryptocurrencies do not have basic functions of the money - they are not generally accepted means of payment, they cannot be, in any case considered as guardians of value and, finally, they are not accounting units.

In addition, Cryptocurrency is not issued by the Central bank and does not guarantee its value, there are no ways to mitigate major oscillations in supply and demand. The rules for functioning of the platforms for trading of Cryptocurrency are in many cases not sufficiently clear and regulated, nor under the control of regulatory bodies.

Cryptocurrency Business in the Republic of Serbia

There are no mechanisms for legal protection  of users of these services in the Republic of Serbia.

People who engage in any activity in relation to virtual currencies do so at their own risk and individually bear the financial and other risks arising from these activities.

Cryptocurrencies can be considered as a means of exchange between indvidulas who accept it as such, with taking of all risks related to the acquisition of such an asset and its value. The most common way to acquire Cryptocurrencies is their purchase on Internet platforms and specialized devices.

According to some information from the Blockchain community in Serbia, Serbian citizens still use a bit more foreign-based services for trading of Cryptocurrencies, primarily to perform speculative activities.  In addition, citizens can acquire Cryptocurrencies through the so-called mining, i.e. solving complex mathematical algorithms, which is not prohibited by Serbian regulations.

 

Relevant laws and legislation

Cryptocurrency

Law on the National Bank of Serbia (LNBS) prescribes that National Bank of Serbia (NBS) shall, among other things, issue and revoke operating licenses for banks, licenses for performing insurance activities, licenses for conducting financial leasing operations, operating licenses for voluntary pension fund management companies and management license funds, permits for providing payment services to payment institutions, licenses for issuing electronic money to e-money institutions, as well as permissions for payment system operation for payment system operators, and supervises performance of these activities and performs other tasks in accordance with the special laws regulating these areas (Article 4 LNBS).

National Bank of Serbia does not issue licenses for cryptocurrencies trading, nor for installing devices for the purchase / sale of Cryptocurrencies.

The Cryptocurrencies are not legally regulated in the Republic of Serbia - they are not recognized as a means of payment, regardless of their name. It is wrong to talk about the Cryptocurrency circulation, because only legal means of payment can be in circulation. Cryptocurrencies are not legal means of payment in the Republic of Serbia.

According with the LNBS, the monetary unit of the Serbia is dinar and the NBS has the exclusive right to issue banknotes and coins in the Republic of Serbia.

In December 2017, National Assembly of the Republic of Serbia adopted the Law on the Prevention of Money Laundering and Financing of Terrorism (LPMLFT), which began to apply on April 1, 2018. In this regard, individuals who enable the replacement of the Cryptocurrencies for the legal means of payment and vice versa are explicitly recognized as people to whom the law applies. These individuals will be obliged to harmonize their operations with the provisions of the LPMLFT, by taking actions and measures for the prevention of money laundering and terrorist financing under this law, such as: identification of clients (who are using a device for purchasing / selling virtual currencies) by taking a copy of the personal document; appropriate reporting to the NBS; designating an authorized person for the execution of these actions, etc.

Conclusion

Being that the Republic of Serbia has not yet passed legislation on cryptocurrency business operations, there is no ground to consider the transactions with cryptocurrencies unlawful. What should be particularly taken into account is that cryptocurrencies cannot be used as means of payment and that individuals and companies that would like to invest  and trade in this way in Serbia must strictly observe the Law on the Prevention of Money Laundering and potential future legislation.