In December 2009, Serbia submitted its application for EU membership and received EU candidate status in March 2012. The negotiations for EU accession between the EU and Serbia commenced in January 2014. To date, 22 out of the 35 negotiation chapters have been initiated. Once completed, Serbia must comply with the Transfer of Funds Regulation (TFR). The projected entry date is 2030.
As it stands, Serbia has implemented the Law on Digital Assets (LDA). The LDA oversees the issuance and trading of digital assets, offering services associated with digital assets; pledge and fiduciary rights on digital assets; the jurisdiction of the Securities Commission and the National Bank of Serbia, as well as the operations of Digital Asset Service Providers (DASPs).
What is the scope of the Law on Digital Assets in Serbia?
DASPs must obtain a license - subject to minimum capital requirements - to operate lawfully.
According to Article 3: Law on Digital Assets, a DASP is a service provider who performs any of the following activities:
“reception, transmission and execution of orders relating to the purchase and sale of digital assets* on behalf of third parties;
purchase and sale of digital assets for cash and/or scriptural money and/or e-money;
exchange of digital assets for other digital assets;
custody (safekeeping) and administration of digital assets on behalf of digital asset users and the related services;
services pertaining to the issuing, offering and placing of digital assets on a firm commitment basis (underwriting) or without a firm commitment basis (uncommitted placement/agent services);
maintaining a register of pledges on digital assets;
digital assets acceptance/transfer services;
digital asset portfolio management;
operation of a digital assets trading platform.”
Moreover, as part of the LDA, DASPs, which include trading platforms, exchanges and custodial wallet providers, need to meet the following requirements:
Be established in Serbia (i.e. a physical office) and obtain prior approval from the competent national authority like the National Bank of Serbia before commencing operations in the country.
Comply with capital requirements, governance protocols, and the imperative of segregating client assets from their own holdings.
Meet specific IT standards to mitigate the risks associated with cyber theft and hacking incidents.
*The LDA defines 2 types of digital assets: virtual currencies and digital tokens.
Digital assets (or virtual assets) represent value traded digitally for exchange or investment. Per the LDA, a digital asset is “a digital representation of value that can be digitally bought, sold, exchanged or transferred and used as a means of exchange or for investment purposes, whereby digital assets shall not include digital representation of fiat currencies and other financial assets governed by other laws, unless otherwise provided by this Law.”
Virtual currencies are used for exchange but not as legal tender. Per the LDA, a virtual currency is “a type of digital asset that is not issued or guaranteed by a central bank or public authority, that is not necessarily attached to a legal tender and that does not have the legal status of money or a currency, but that is accepted by natural or legal persons as a means of exchange and that can be bought, sold, exchanged, transferred, and stored electronically.”
Digital tokens are a digital form of property rights. Per the LDA, a digital token is “a type of digital asset and means any intangible property representing, in digital form, one or more property rights, which might include the right of a digital token user to specific services.”
Article 6 explains that the law does not apply to:
Digital transactions deemed a form of loyalty or reward with no potential for transfer or sale, as well as mining and electronic money, fall outside the purview of this legislation.
The LDA makes no mention of self-hosted wallets.
Who is the supervisory body for DASPs in Serbia?
Virtual currencies fall under the National Bank of Serbia (NBS)
Digital tokens fall under the Serbian Securities Commission (SEC)
If a digital asset functions as a virtual currency and a digital token, both the NBS and SEC will be responsible for oversight.
What information needs to be collected before transacting?
DASPs must adhere to applicable existing anti-money laundering and countering the financing of terrorism (AML/CFT) regulations.
According to the LDA Article 28, “the payment of digital assets in funds shall be made in accordance with the law governing payment services.”
As per the Law on Payment Services, Article 15, a payment service user (a natural or legal person that makes or made use of a payment service in the capacity of a payer and/or payee or has contacted the payment service provider to make use of such services - or a VASP customer) must initiate a “framework contract” when opening an account with a payment service provider.
This contract is required to maintain the account with the service provider. To open the account, the payment service user needs to provide the following information if acting as a natural person:
name,
surname
address of permanent and/or temporary residence
unique identifier or other data that the payment service user must specify for the purpose of correct execution of a payment order.
In other words, the payment service provider is to conduct KYC and customer due diligence processes before the customer can transact.
When do you need to comply with the Law on Digital Assets in Serbia?
Now. The Serbian Law on Digital Assets came into effect on 29 June 2021
Which regulations are applicable to digital assets in Serbia?
Original Version: Закон о дигиталној имовини: 153/2020-3
Original Version: ЗАКОН о платним услугама
What else do you need to know about the Law on Digital Assets in Serbia?
All information pertaining to digital asset transactions and mandated by AML/CFT guidelines must be retained for a minimum of 10 years and provided to competent authorities as needed.
NBS-regulated financial institutions are prohibited from engaging in "investing in digital assets, offering services associated with digital assets, or accepting digital assets as collateral." However, they are permitted to offer cryptographic key custody services.
