CBCG: Doing business with cryptocurrencies freely in Montenegro, the conditions have not yet been regulated

The central bank emphasized that there is no legal basis for cryptocurrencies that could classify them as means of payment, electronic money or payment instrument

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Central Bank of Montenegro, Photo: Luka Zeković
Central Bank of Montenegro, Photo: Luka Zeković
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

Businesses related to cryptocurrencies are not yet regulated in Montenegro, so their performance is free, representatives of the Central Bank (CBCG) announced, adding that there is no adequate methodology for assessing the level of transactions in cryptocurrencies in our country.

"As businesses related to cryptocurrencies are not yet regulated, they can be carried out freely. This means that these businesses are not under the authority of the Capital Market Commission (KTK), i.e. CBCG, and there is no adequate methodology for assessing the level of cryptocurrency transactions in Montenegro," representatives of CBCG told Mina-business agency.

The central bank emphasized that there is no legal basis for cryptocurrencies that could classify them as means of payment, electronic money or payment instrument.

"The field of trade, issuance and supervision of digital assets and the provision/providers of services related to digital assets, which also includes cryptocurrencies, is not regulated in Montenegro," said the CBCG in response to the question of whether they have information that cryptocurrency transactions are carried out in Montenegro and how it can be determined.

The CBCG said that certain sources of private companies for the estimation of the number of owners of cryptocurrencies at the global level, such as Triple, speak of a figure of about 7,2 thousand owners of cryptocurrencies in Montenegro, i.e. 1,16 percent of the population, which puts us in line countries with a relatively low participation of cryptocurrency owners.

"However, we are aware that in the last two years displaced persons and investors from countries that are in the top ten owners of cryptocurrencies at the global level, such as Russia and Ukraine, and in a slightly smaller number from Turkey, have been living in Montenegro, and that this dynamic consequently affects to a greater number of transactions in cryptocurrencies, including the purchase of real estate," explained the CBCG.

Until the appropriate law is passed, the CBCG, like other regulators of financial markets, warns potential investors about the risks of investing in cryptoassets related to the fact that it has the characteristics of a speculative investment, cryptoassets do not have coverage, that is, the guarantee of the CBCG or any other institution.

"Also, the invested amount of the investment is not insured, it does not belong to the consumer protection system, nor is it covered by the deposit insurance system, and there is no competent institution that you can turn to for legal protection against losses caused by transactions or investments in crypto assets," added representatives of the CBCG.

To the question of whether there is a real danger of abuse in the field of cryptocurrency trade, the CBCG answered that the nature of that type of trade, as well as the experience of individual countries, indicates that it is almost impossible to prevent all types of fraud related to cryptocurrencies with the legal framework and its implementation alone.

"These are frauds starting from more benign hacker attacks on computers that have cryptocurrencies by inserting malicious software or viruses, to presenting cryptocurrencies to investors through initial offers that are hidden behind ordinary pyramid schemes, because of which investors lose money," said the CBCG.

According to them, it is enough to say that over 30 billion USD was lost due to crypto fraud in the last decade, of which the most crypto fraud was recorded last year with 436 incidents, and about 12 billion USD was stolen.

"As a responsible regulator, the CBCG believes that the minimization of the risk of abuses related to the trade of cryptoassets is ensured by incorporating the best standard in this area, which is the EU regulation MICA - The Markets in Cryptoassets," stated the CBCG.

As they explained, the Central Bank does not support quick and incomplete national solutions, which can lead to an unnecessary escalation of risks, but also cause damage to the international reputation of Montenegro.

"We have witnessed that the national solutions in the environment did not give the expected results in protection against abuses. "Montenegro will be the first country outside the EU to harmonize its national standards with the EU's regulatory framework, which will be transposed into the Draft Law on Digital Assets," said the CBCG.

By transposing that directive into Montenegrin law, a distinction is made between cryptocurrencies on the one hand and tokens on the other. Also, the classification of crypto assets into asset-related tokens (ARTs), electronic money tokens (EMT) and user tokens was done. Given that they are not covered by the MICA framework, there is no regulation of decentralized finance (DeFi), non-volatile tokens (NFT) and central bank digital currencies (CBDC).

"Through the Draft Law, issues of transparency of issuance and trading of crypto-assets, requirements related to public offering and inclusion of crypto-assets for trading on the platform for trading crypto-assets, creation of requests for approval for work and supervision of service providers related to crypto-assets, token issuers related to assets and issuers of electronic money tokens, as well as issues of their operations, organization and management", stated the CBCG.

The draft law, as specified, will also cover the issues of requirements for the protection of holders of crypto-assets during issuance, public offer and listing for trading, protection of clients of providers of services related to crypto-assets, measures to prevent trading based on insider information, illegal publication of insider information and market manipulation in relation to cryptoassets, in order to ensure the integrity of the cryptoasset market.

"When it comes to deadlines, the goal is for the first version of the Draft Law to be completed by the end of this year. Representatives of the Central Bank of Serbia and the Commission for the Capital Market, which were entrusted with the coordination of activities related to the drafting of the Draft Law within the framework of the Working Group under the auspices of the Financial Stability Council, began their work, with an agreed division of activities", stated the Central Bank of Serbia.

The representative of the Ministry of Finance, as it is concluded, is also a member of the Working Group, with the aim of timely changes to tax laws, i.e. the tax treatment of crypto-assets, which are not covered by MICA.

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