In a reversal of previous policy, the Serbian government will now permit the issuance and trading of digital assets and related services under a law that went into effect Dec. 29.
The draft law was announced in October and local media reported the law was passed by the nation’s legislators in late November. The “Digital Asset Law” officially went into effect Tuesday following its publication in the official gazette, and will be applied six months from now.
Under the new specifications, digital asset service providers in Serbia can operate after “obtaining permission from the supervisory authority.” The country’s Securities Commission and the National Bank of Serbia (NBS) are tasked with supervision and applying the law.
Serbia was not always friendly towards crypto. In 2014, the NBS declared that bitcoin was not legal tender in the country.
The new law comes at a time when Eastern European countries, including Romania and Bulgaria, are expanding their tech industries. Serbia is experiencing a tech boom, with the industry accounting for more than 6% of the country’s GDP.
With the new rules, digital assets can be issued in Serbia with or without an approved white paper, though an asset with an unapproved white paper cannot be advertised in the country and there are limitations on the amount of such assets that can be distributed.
When it comes to trading, digital asset exchanges will need licenses to operate, according to the new law. Secondary trading of digital assets issued in Serbia (with an approved white paper), over-the-counter (OTC) trading and use of smart contracts in secondary trading are also allowed.
The provisions of the new law do not apply to digital transactions that are carried out within a limited network of people accepting digital assets “as a form of loyalty or reward, without possibilities of its transfer or sale.” The law also doesn’t apply to miners, who are permitted to acquire digital assets by mining, according to the law.
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However, financial institutions under the supervision of the NSB are still prohibited from engaging with digital assets except in keeping cryptographic keys. They cannot convert their assets to virtual currencies or “instruments associated with digital assets,” provide services related to digital assets or participate in businesses offering such services.
Digital asset service providers are required to request for permission from a supervisory body within the six months before the law is implemented.