Although preparations for the regulation of digital assets in Montenegro are underway, the Bill on Crypto-Assets will not be submitted to the Government in 2025. As confirmed to "Vijesti" by the Ministry of Finance, due to the complexity of the European MiCA (Markets in Crypto-Assets Regulation) regulation and the fact that even the European Union member states have not yet fully implemented it, the drafting of the law has been delayed.
The Ministry of Finance, the Central Bank (CBCG) and the Capital Market Commission are working on the preparation of this law.
"In early June 2023, the European Commission adopted the MiCA regulation (which regulates the regulatory framework for cryptoassets). The Ministry of Finance, in cooperation with the Central Bank of Montenegro and the Capital Market Commission, has begun preparatory activities to draft a law that will regulate the area of digital, or cryptoassets, in accordance with the MICA regulation. Given the importance and complexity of these regulations and technical standards, as well as the fact that they have not yet been implemented by the European Union (EU) member states, the draft law is not planned in the Government Work Program for 2025," the Ministry of Finance said.
The department headed by Minister Novica Vuković stated that the amendments to the Law on the Prevention of Money Laundering and Financing of Terrorism, for which the Ministry of Internal Affairs is responsible, stipulate the obligation to register service providers related to crypto assets with the Capital Market Commission, and that the Commission will carry out inspections and other supervision of service providers related to crypto assets.
Cryptoassets enter the tax system
"The Montenegro EU Accession Program 2025-2026, as well as this year's Government Work Program, plan to adopt the Law on Amendments to the Law on Tax Administration in the fourth quarter of this year, which will, among other things, align the current law with Directive EU/2023/2226 on the automatic exchange of information on crypto-assets. The implementation of this directive will prescribe the legal basis for the automatic exchange of information on crypto-assets that the Tax Administration will exchange with the competent authorities of EU member states and other states, or territories of states," the Ministry of Finance stated.
As they explained, according to the planned legal amendments, all entities providing services related to crypto-assets will be required to keep detailed records of their users, whether they are natural or legal persons. This obligation also applies to situations in which one or more natural persons exercise control over the users. In addition to basic data on users, operators in the digital asset sector will have to record all services provided, activities undertaken, transactions, orders and income generated from the sale or acquisition of digital assets. Records will be kept separately for each type of crypto-asset, in accordance with international reporting standards and applicable legal regulations.
"A reporting crypto-asset service provider and a non-reporting crypto-asset service provider will be obliged to submit an application for registration with the competent tax authority, in accordance with the law, and be entered in the Register of Crypto-Asset Service Providers with the Capital Market Commission of Montenegro in accordance with the law regulating measures and actions taken to prevent and detect money laundering and terrorist financing. The draft law will also prescribe penalties if a reporting crypto-asset service provider fails to comply with the prescribed obligations, or fails to implement them in accordance with the law," explained the government department.
The Ministry of Finance said that Montenegro's decision to join the EU has initiated a reform of the financial sector in accordance with EU standards, i.e. a continuous obligation to harmonize domestic regulations with EU regulations.
The Commission amended the bill
The President of the Capital Market Commission, Željko Drinčić, told Vijesti that within the framework of activities initiated with the aim of normative regulation of the field of digital and crypto assets in Montenegro, the Ministry of Finance, as the competent and coordinating body, in cooperation with the Central Bank of Montenegro and the Capital Market Commission, has begun preparatory steps towards the development of a legal framework that will regulate this dynamic and complex area, and that the Commission's role in the preparatory activities primarily related to the development of expert analyses, the formulation of normative solutions, as well as the preparation of a specific draft law.
"As a regulatory body responsible for supervising entities engaged in the circulation of digital and crypto assets, the Commission has fully fulfilled all obligations under its jurisdiction, and the complete draft text of the Law has been submitted to the Ministry of Finance for further procedure. We believe that the normative regulation of the digital asset market is of essential importance for strengthening legal certainty, protecting investors, as well as for harmonizing with modern European and international regulatory practices. As a regulator with jurisdiction over entities engaged in digital and crypto assets, we are fully aware of the challenges and potential that this area brings," Drinčić emphasized.
CBM no response
"Also, numerous activities are continuously being carried out to eliminate business barriers, as well as to create conditions for the development of financial technologies (Fintech), bearing in mind that digital transformation, based on secure infrastructure and key systems for faster and easier use of electronic services, is one of the priorities of the Government, all with the aim of further developing the digital economy and strengthening economic growth. In this regard, at the end of 2024, the Government adopted the Financial Technologies (FINTECH) Strategy for Montenegro 2025-2029, which is available on the website of the Ministry of Finance," the Ministry of Finance said.
The Central Bank of Montenegro did not respond to "Vijesti" about the results of the supreme monetary institution's work regarding this law so far and when it is realistic for the state to receive it.
"In accordance with Article 131, paragraph 1 of the Law on the Prevention of Money Laundering and Financing of Terrorism, the Capital Market Commission supervises service providers related to crypto assets, while proposing laws to the Government prepared by the Capital Market Commission is within the competence of the Ministry of Finance," the Central Bank of Montenegro said.
Commission introduces register of service providers
Drinčić said that according to the latest amendments to the Law on the Prevention of Money Laundering and Financing of Terrorism, the Capital Market Commission will be responsible for maintaining a register of service providers related to crypto assets.
"This represents a significant step forward for us as a regulator, as well as for the entire regulatory framework in Montenegro, as crypto-assets are explicitly recognized for the first time through a legal act. At the same time, it is also a major challenge, given the complexity and rapid development of this area on a global level. In this regard, we plan to prepare detailed by-laws that will precisely define the conditions, procedures and criteria for registration, as well as the obligations of service providers related to crypto-assets," said Drinčić.
According to him, the Commission will, through public notices and available communication channels, strive to provide clear and precise information to all interested parties, in order to enable a simple and transparent implementation of the registration procedure.
"Although the establishment of the registry is possible without the adoption of a separate Law on Digital Assets, as this jurisdiction is now clearly prescribed by the Law on the Prevention of Money Laundering and Financing of Terrorism, we believe that the adoption of an umbrella law that regulates this area in detail, namely the Law on Digital Assets, would be essential. This would further strengthen the institutional framework, enable a more comprehensive and precise regulation of the digital asset market, and provide additional security and legal clarity to all market actors," Drinčić assessed.
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