Bitcoin Will Not Replace Euro or Any Other Currency
International media recently announced that Luxembourg has granted a payment institution licence to a bitcoin exchange. Since this information was misinterpreted, the NBS wishes to draw attention to the fact that this is only a licence to provide payment services and not a recognition of bitcoin as a currency (because, in its essence, bitcoin is not a “real“ currency). In other words, it is definitely not the case that bitcoin will replace the euro or any other currency, as suggested by some media over the past several days.
Investment in bitcoins or other virtual currencies constitutes a risk and may lead to financial losses because they are neither issued nor guaranteed by a central bank. Anyone investing in bitcoins or engaging in any other activity involving virtual currencies shall do so at their own liability, bearing all financial risks and risks in terms of non-compliance with regulations governing foreign exchange operations, taxation, trade, etc.
As regards bitcoin payments in the Republic of Serbia, the NBS issued a press release on 2 October 2014 to warn the public about the potential risks of using bitcoins. Note that, pursuant to the provisions of the Law on the National Bank of Serbia, the dinar is the legal tender of the Republic of Serbia and all monetary liabilities arising from transactions concluded in the country are expressed in dinars and settled in dinar-denominated means of payment, unless stipulated otherwise by other law.
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 that Law. Based on the above, any purchase of bitcoins with foreign currency would not be in compliance with the regulations governing foreign exchange operations. In addition, the Law on Foreign Exchange Operations defines exchange operations as the activities of purchase and sale of foreign cash and cheques denominated in a foreign currency from/to natural persons, while the Decision on Types of Foreign Exchange and Foreign Cash to be Purchased and Sold in the Foreign Exchange Market sets out that banks and authorised exchange dealers may buy and sell foreign cash only in currencies stipulated by the Decision.
The use of cryptocurrencies in Serbia is not yet widespread, but the NBS monitors their use both globally and at home. Note that the use of cryptocurrencies, because of the anonymity they offer, this being one of their key features, is monitored also in the context of current global security issues and their potential for abuse (financing criminal activites, money laundering, etc). In the coming period too, the NBS will consider, in cooperation with other state authorities, whether there is any need for designing regulatory or other response within our economic system in relation to cryptocurrencies.