In a massive boost to the cryptocurrency market, the Serbian government has allowed the issuance and trading of digital assets under a law effective December 29th 2020. The draft law was proposed earlier in October and has now gone into effect following its publication in the Official Gazette. This means the law will be in effect six months from now.
Serbia was never friendly towards bitcoin and went to the extent of declaring Bitcoins as illegal in 2014. However, the recent technology boom in Serbia coupled with technological expansion in Eastern European countries of Romania and Bulgaria has prompted the authorities to consider this decision.
Activities Permitted under the New Law
Since technology contributes to 6% of the nations’ GDP, the inclusion of digital assets can definitely give an edge to Serbia in comparison to the other expanding nations.
- Digital Assets service provider can operate post obtaining necessary permissions from the supervising authority. The nation’s Securities Commission and National Bank of Serbia [NBS] have been entrusted with supervision and application of the law.
- With respect to trading, digital asset exchanges would require licenses for operations. Secondary trading, OTC (Over-the-counter) contracts and use of smart contracts are also permitted.
- There is flexibility for issuance of digital assets without a white paper. This is a guide that informs readers about complex issues and process in a simplified manner. It helps readers to understand and issue and arrive at an immediate solution. An asset with an unapproved white paper cannot be advertised in the country and there would be restrictions on the distribution of such assets.
- The law does not apply to digital transactions carried out in a limited network of people who are accepting these assets as a form of loyalty or reward without any probability of sale or transfer.
- This law is not applicable to miners permitted to acquire digital assets by mining.
Financial institutions currently under the supervision of the NSB are still prohibited from engaging in digital assets except in retention of cryptographic keys. The assets cannot be converted to virtual currencies or offer services relating to digital assets or participate in businesses offering such services.
It is essential for the digital service provider to seek permission from a supervisory body within 6 months before the law is implemented.
The step taken by Serbia is definitely a smart move considering the expansion of their economy and dependence on Digital assets amidst the pandemic. An extensive thought process seems to be involved before making it a law and over a period of time, this method can become a progressive opportunity for the development of the entire Serbian economy.
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