NBS Warns that Bitcoin Is Not Legal Tender in Serbia
In reference to recurrent writings about the use of bitcoin as the new ''currency'' in international financial markets, news about the installation of bitcoin generating machines and queries whether bitcoin can be used in the Republic of Serbia, the NBS wishes to draw public attention to the following:
Bitcoin is a virtual currency. Virtual currency is a form of unregulated digital money that is neither issued nor backed by a central bank. Virtual currencies such as bitcoin can be bought in exchange for conventional fiat currencies such as the euro, pound sterling or US dollar directly from another person or in exchange platforms. Bitcoins are held in personalised bitcoin accounts known as digital wallets. They can be used as a means of payment for goods and services and can be converted back into fiat currencies. The value of bitcoin in exchange platforms is not guaranteed. In fact, it is rather volatile and driven by supply and demand.
Exchange platforms where virtual currencies are converted into conventional fiat currencies are, as a rule, unregulated and their users are not protected from trade-related risks. The users do not have any legal protection if the platform loses money or fails (due to hacking, for instance) even if the platform is registered as an economic entity with the competent national body.
For this very reason, the European Banking Authority, as an independent authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector so as to maintain financial stability, issued a warning in late 2013 to highlight the risks consumers may face when buying, holding or trading virtual currencies
In its publication “Virtual Currency Schemes”, the ECB also stressed that bitcoin does not meet all the criteria necessary to be considered electronic money. Moreover, bitcoin does not fall under the Electronic Money Directive 2009/110/EC or the Payment Services Directive 2007/64/EC
As for bitcoin payments in Serbia, tThe dinar is the country’s legal tender pursuant to the NBS Law, and all cash liabilities arising from transactions concluded in the country are expressed in dinars and settled in dinar-denominated means of payment, unless stipulated otherwise by another law. Furthermore, the Law on Payment Transactions envisages that payment transactions are performed in dinars. According to the Law on Foreign Exchange Operations, payments, collections and transfers among residents and between residents and non-residents are performed in dinars, or in foreign currencies in exceptional cases which are prescribed by the Law. The same Law defines exchange operations as the activities of purchase and sale of foreign cash and cheques denominated in a foreign currency from/to natural persons. Pursuant to the Decision on Types of Foreign Exchange and Foreign Cash to be Purchased and Sold in the Foreign Exchange Market, banks and licensed exchange dealers may buy and sell foreign cash only in currencies stipulated by the Decision.
Given the above, please be advised that bitcoin is not a legal tender in the Republic of Serbia and cannot be subject to sale and purchase by banks and licensed exchange dealers. For the above reasons and the fact that there are no legal protection mechanisms, investing in bitcoin and other similar virtual currencies not issued or backed by the central bank constitutes a risk and may result in financial losses. Anyone engaging in these or other activities involving virtual currencies does so at their own risk and responsibility.