Serbia’s new encryption law: start a cryptocurrency business in Serbia

In recent years, due to the rise of Bitcoin, some immigrant countries also accept Bitcoin as payment. The Ministry of Finance of Serbia published the “Draft Digital Asset Law” on its website, asking visitors to the website to comment and make suggestions. The Ministry of Finance has proposed a complete regulatory framework for cryptocurrency business.

“By passing the Digital Assets Law, Serbia will belong to a small group of the most innovative countries in the world. These countries have recognized the synergy between new technologies and the financial services sector and decided to adopt a legislative framework to support and improve this Singing. The Minister of Finance pointed out that while ensuring effective investor protection, financial market integrity and national financial stability.

What are digital assets?

Digital assets are defined as digital records of value that can be purchased, sold, exchanged, or transferred digitally, and can be used as a means of exchange or for investment purposes. Virtual currency is defined as a digital asset that is not issued and its value is not guaranteed by the central bank or other public institutions; it is not necessarily linked to legal tender and has no legal status for money or currency, but it has been accepted by individuals or legal entities. Buy, sell, exchange, transmit and store electronically.

Digital assets (encrypted assets) are inextricably linked to the blockchain because they are the blocks that make up the chain itself. There are many forms of encrypted assets, with different rights and functions. Encrypted assets can be used as service access keys (often referred to as “utility tokens”), can be designed to facilitate payment (often referred to as “payment tokens”), but can also be designed as financial instruments, for example as transferable securities .

How do these proposals affect the cryptocurrency business?

Digital asset service providers (especially trading platforms, exchanges and custodial wallet providers) will have to have physical institutions in Serbia, and must obtain authorization from the national authority (National Bank of Serbia) before starting activities. They must comply with capital requirements, governance standards, and the obligation to separate client assets from their own assets. These encrypted asset service providers will also comply with IT requirements to avoid the risk of network theft and hacker attacks.

Regarding the issuer of digital assets, the proposal requires the publication of a white paper, which includes all relevant information about a specific encrypted asset. This information will include a detailed description of the issuer, project, and planned use of funds, conditions, rights, obligations and risks. The members of the issuer’s management body must meet integrity standards, and the issuer of encrypted assets is prohibited from engaging in misleading market communications. The compliance with all these requirements will be supervised by the national authorities.

For issuers of asset reference tokens, the main requirements include authorization obligations, governance requirements, conflict of interest rules, disclosure of stability mechanisms, investment rules, and other white paper requirements. For example, the obligation to disclose information about any potential claims and the minimum rights for such claims.

The issuer of electronic currency tokens shall comply with the regulatory requirements of the Electronic Currency Directive and the rules stipulated in the Encrypted Asset Market Regulations.

Digital asset service providers will be subject to prudential requirements, organizational requirements, customer fund custody rules, mandatory complaint handling procedures, and conflicts of interest. In addition, the specific requirements depend on the type of encrypted asset service provider.

The Digital Asset Law hopes to help banks accept cryptocurrency. More regulatory guidelines will help traditional banks adapt to cryptocurrencies. These proposals attempt to refute the view of some traditional banks that transactions involving cryptocurrencies have higher risks and require lengthy and expensive due diligence.

Who can provide digital asset services and what are these services?

Only companies registered in the Republic of Serbia can become providers of services related to digital assets.

The registration provider can perform some or all of the following operations:

Receive, transfer and execute orders related to the purchase and sale of digital assets on behalf of a third party;
Services used to buy and sell digital assets in cash and/or funds in the account and/or electronic money;
Digital asset exchange services for other digital assets;
Store and manage digital assets for user accounts of digital assets and related services;
Services related to the issuance, provision and sale of digital assets, with or without obligation to purchase
Record guarantees related to digital property;
Digital asset acceptance/transfer service; (capital requirement 50.000 euros)
Digital asset portfolio management ((capital requirement 50.000 euros)
A platform for organizing the trading of digital assets (capital requirements of 125.000 euros)
The minimum registered capital of the entity applying for the relevant license must be between 20,000 Euros and 125,000 Euros, depending on the type of services it provides.

Serbia is now home to many successful fintech start-ups, and many other companies usually rebuild their models by cooperating with fintech companies.

Large and small technology companies are increasingly diversifying the development of financial services. In addition, digital finance has also helped citizens and businesses solve the unprecedented situation caused by the coronavirus pandemic.

It is estimated that the new regulations will come into effect early next year.

Welcome to the Serbian team can provide you with practical knowledge to start your Serbian cryptocurrency business or exchange. We are now operating in accordance with the current laws, and we have more than 10 customers who already have their own cryptocurrency businesses in Serbia. We will help you build a successful cryptocurrency business, so please contact us immediately.

Posted in Immigration News tagged Serbia cryptocurrency, Serbia digital currency, Serbia digital asset editor

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