Cryptocurrency Regulations in Eastern Europe
With the rapid adoption and growth of cryptocurrencies across the world, there’s a need to clearly identify what countries favor, support and intend to regulate it.
For this article, we’ll be looking at Eastern Europe and each individual country’s openness to cryptocurrencies as a whole.
This is important because after Asia, Europe is the next biggest continent that has shown significant interest in cryptos as an asset or alternate financial instrument.
Understanding the regulatory complexities of each country will help ensure potential investors that are resident in those countries make informed decisions about investing in cryptos.
This country is clearly cautious about cryptocurrencies as observed in their December 2017 announcement. The country distanced itself by stating that bitcoin and other cryptos are not regulated in the country.
As a result, they can’t be used as mode of payment for goods and services. Of course, there hasn’t been any enforcement aimed at preventing its citizens from trading and exchanging cryptocurrencies.
We’re guessing the government issued that statement in order to ensure they had plausible deniability in the event of a cryptocurrency crash.
We also have reason to believe there’s an active user base in Serbia, owing to the Serbian Blockchain Initiative’s call on the government to help encourage the growth of blockchain technology in the country.
Even though there’s no specific directive or reply from the government, we don’t think the government is outrightly against it. If they were, they would have issued an announcement or statement to that effect.
If you are resident in Serbia, just make sure that you do your due diligence before investing in any cryptocurrency. While the government may not be preventing you from trading or exchanging the coins, they are also not protecting you. It’s all in your hands.
While the government hasn’t really addressed the usability of cryptos within its borders, it has indirectly shown its willingness to profit from their trade or exchange by demanding that residents pay taxes on their crypto trades and mining activities. These financial obligations include a 15% personal income tax and another 22% for health coverage.
The government however, doesn’t support the use of crypto for illegal activities. In fact, it passed a law in 2017 regarding this, stating it would seize all cryptos associated with money laundering schemes. This is in compliance with the global anti-money laundering regulations that’s aimed at discouraging the use of cryptos for money laundering activities among other sources.
As for blockchain technology, there’s been little on that front, except for one from a team of Switzerland based who claim their cryptocurrency called Korona is better than most cryptos in the market in the sense that it can be used for actual transactions.
So, it’s clear there’s not much in the way of blockchain based activity in the country and no national cryptocurrency agenda.
With a laissez faire approach to cryptocurrencies, the country recently stated that the country’s banks aren’t at risk. In fact, the government seems to encourage investment in cryptocurrencies, if their “Don’t Be Afraid of Bitcoin” release is anything to go by.
The Czech National Bank went to clearly reinforce the power of conventional currencies in trade and commerce and declared that cryptos will never be as stable or useful for day to day transactions. The country however, took a stance against using cryptos for money laundering purposes and tax evasion.
To that effect, they passed a law requiring all exchanges to release the real names and details of bitcoin traders and exchangers in the country to prevent them from engaging in illegal activities using bitcoin as a means of transaction.
The good news is their latter position has remained fairly constant since the retraction as seen in the number of cryptos with Russian origin listed in public exchanges.
In fact, the country just launched its first crypto investment bank with the sole intention of examining of Russian based ICOs for their legitimacy first, before they finally go public.
Even more, the country is expected to pass a bill that will impact blockchain and cryptos before the 7th of July, 2018. The ultimate goal of this bill is to prevent the criminalization of digital currencies and their use as vehicles for money laundering, tax fraud, sponsoring terrorists and scams.
Of course, this bill has raised a lot of concerns among blockchain advocates who say it’s restrictive, and will stifle the growing crypto economy.
While that still remains to be seen, blockchain based firms are launching their ICOs and essentially running their tokens. However, the country’s new crypto focused bill clearly states that cryptos are not legal tender within the country.
The country’s focus on blockchain though is huge with the government clearly stating the blockchain tech and development is a priority. In furtherance of this, the government launched its first blockchain implementation that saw a collaboration between Sberbank and the Federal Antimonopoly Service (FAS) yield the positive result of blockchain based document transfer and storage last year. This was followed by the first commercial bond transaction carried out on the blockchain in May 2018.
The country clearly doesn’t like or want cryptos as seen in their 2017 statement highlighting the risks of trading them. It very much denounced any operators and borderline branded their establishments as illegal. According to the release,
“The Bank of Albania has licensed no financial operator whose activity involves the use of virtual currencies. As a result, every company that is involved in these operations in the Republic of Albania is not licensed and its activity does not comply with the regulatory and supervisory framework of the Bank of Albania.”.
While the government hasn’t outrightly banned crypto related activities, residents of Albania who are trading or exchanging cryptocurrencies, would do well to take note of the government’s stance and ensure their crypto investments and their proceeds are properly protected.
Romania is a very crypto friendly country and encourages the growth of blockchain. In fact, the country’s first bitcoin ATM was introduced four years ago, in 2014.
The country’s government is interested and liked the idea of cryptocurrencies, but have expressed a need for the market to be regulated. Romanian residents therefore, should take advantage of the government’s acceptance of cryptos and trade/invest in them.
Cryptos are a no-no in Macedonia as the government considers it illegal. An official statement released by the then Governor of National Bank of Macedonia, Dimitar Bogov said
“In Macedonia, juridical means for cash and non-cash payments are denars. International payments operations are carried out by banks. Therefore, trading and use of Bitcoin is illegal.”.
Citizens who are interested in trading cryptos would do well to pay attention to this statement and proceed carefully with all subsequent cryptocurrency transactions.
Lithuania, Estonia and Latvia
These three countries are very welcoming about blockchain and even have a memorandum of understanding signed to that effect. The MOU reads:
“The Estonian Ministry, the Latvian Ministry and the Lithuanian Ministry recognize the importance of the development of the capital market and a stronger institutional framework to handle the cross-border challenges in the Baltic States. […] [And] supporting the development of capital market innovations and new technologies with a consideration for regional Fintech solutions, e.g. distributed ledger technology.”
While cryptos aren’t legal tender in all three countries, they are recognized as asset vehicles, while blockchain tech is highly encouraged. To wit, Latvia’s government is considering charging capital gains tax on all crypto proceeds.
In fact, the various governments are looking into ways they can regulate the market. Lithuania is very keen on crypto and has shown that by engaging cryptocurrency traders, government regulators, and banks in discussions aimed at achieving a unified goal for cryptos.
The country is very ICO friendly and encourages it through its bank policies designed to issue ICO licenses speedily and affordably.
While Estonia also has a similar blockchain friendly approach, they are wary of its misuse as a money laundering instrument. To that effect, they have instituted an anti-money laundering procedure that involves identify verification and a KYC process.
The country also selectively considers certain ICOs as securities, depending on their meeting a few criteria. Of the three countries, Estonia is clearly the leader of the pack in blockchain.
The country’s huge digitization projects as well as blockchain based e-voting platform are indicators of blockchain’s success in this country. Even more, the country made considerable effort towards the launching of Estcoin, their national cryptocurrency.
Unfortunately, that was nipped in the bud by Mario Draghi, Euro Central Bank’s President who stated that member countries can only use the Euro as legal tender, and nothing else. This resulted in the Estonian government abandoning the idea of a national cryptocurrency.
Cryptocurrency regulation in Ukraine is still in its very early stages. In fact, the government is only recently beginning to dabble into in the hopes of bringing some balance to the free crypto market in the country.
Ukraine is currently a hotbed for cryptos, with bitcoin being the most popular cryptocurrency in circulation. The government’s intention is to legalize cryptocurrency, making a legal financial instrument.
However, they’re also aware of the attendant risks that cryptocurrencies pose; most notably, their penchant for being used in illegal activities.
To that end, the government has begun keeping a close eye on crypto trading and mining in a bid to prevent people from using it for those purposes. A recent raid carried out on Kiev’s Kvazar semiconductor plant, exposed a cryptocurrency mining setup that had links to rebels.
That said, the Ukrainian government is also interested in utilizing blockchain for its proposed digital currency and any other viable schemes. For instance, the country launched the first blockchain based realty service, where investors or interested parties can rent properties and pay using cryptocurrencies.
According to them,
“Our ambition is for Ukraine to be one of the world’s foremost nations in establishing a comprehensive blockchain ecosystem, and the real estate sector forms an important part of our overall blockchain strategy,”.
The country is also the first to launch a state auction on the blockchain, and has gone on to partner with the Bitfury Group in a bid to create blockchain solutions for its electronic services.
Other countries like Slovakia, Croatia, Poland, Moldova, Slovenia, Bulgaria, and Belarus are still working on their crypto and blockchain regulations. Some are more encouraging, others, not so much. If you’re resident in any of these countries, you should make an effort to see what your government is saying about cryptocurrencies and blockchain.