Recently, there is an emphasis on the need to regulate certain activities related to digital assets, along with provision of a preliminary specification of the actions that need to be taken in order to start regulating this area. The realization of this idea began with the adoption of the Law on Changes and Amendments to the Law on the Securities Market, which was published in the Official Gazette of the Republic of Srpska no. 63, dated May 7, 2022, and it contains a definition of the concept of “virtual currency”, which represents “a digital record of value that was not issued and whose value is not guaranteed by the Central Bank or other public sector authority, which is not necessarily linked to a legal tender and does not have the legal status of money or currency, but legal entities and individuals accept it as a legal tender and can be used to buy, sell, exchange, transfer and deposited electronically”.
Apart from the introduction of the concept of virtual currency and a definition which, we would say, better defines what virtual currency does not represent than what it represents, the concept of digital assets itself is not closely defined, and in relation to it virtual currencies, the issuance of these currencies, as well as the secondary trading of digital assets, the provision of services related to digital assets, law enforcement, or any other aspect that is necessary to make a phenomenon like this legally regulated.
With these changes, the Securities Commission’s competences in the area of supervision are expanded, so it also supervises legal entities established in the Republic of Srpska which provide virtual currency exchange services and wallet depository services through their business units, especially in the segment of preventing money laundering and financing of terrorist activities. In addition, the Commission maintains records of entities who provide virtual currency exchange services. As the changes and amendments emphasize that the Republic of Srpska, as well as other public sector bodies, do not guarantee the value of virtual currencies and are not responsible for any damage and losses that may arise in connection with conducting transactions with virtual currencies, service providers are obliged to inform the users of these services, before establishing a business relationship, about the possible risks of conducting transactions with these currencies. Bearing in mind the above, there is an obligation for persons who provide virtual currency exchange services and wallet depository services that within 30 days from the day of establishment, submit to the Commission a notice on the provision of these services, as well as a description of the internal control measures they have established with the aim of fulfilling obligations established by regulations on prevention of money laundering. The service providers named in this law, as well as the majority of participants in this market, have clearly taken the position that it is necessary to regulate this issue, but with these legal solutions, they have only received an insufficiently defined obligation to undertake actions and measures for the detection and prevention of money laundering, which imply an in-depth analysis of the client (determining and verifying the identity of the party, and determining and verifying the identity of the real owner, noticing unusual transactions, reporting suspicious transactions, etc.)
Therefore, it is evident that these changes will not improve anything in the market where the companies that provide the services mentioned above are already operating, except that the level of attention and control will be increased from the aspect of taking measures to prevent money laundering and the financing of terrorist activities. However, it is necessary to address the challenge of regulating new financial technologies that are present on a global level in much more detail and precision, even if that means looking at and following solutions from the region that are already present in the form of the Law on Digital Assets in Serbia. This implies an explicit and unambiguous definition of all significant concepts, procedures, processes, tax treatments, as well as the control over the implementation of the law. If we only superficially open the topic of regulation of these technologies, we only open the way to alternative interpretations, and what the legislator wanted to say, but filling legal gaps only takes us away from the goal.