The Rise of Cryptocurrency in Serbia

Business | 16.11.2022
5 minut(es) read

When we think about the next Web3 hub in the world, our minds instantly go to places like Dubai, El Salvador, and Singapore, however, few look at the heart of the Balkan region, especially Serbia. Even if the country isn’t going full speed into Web3 and crypto, it is taking significant steps in order to become an exciting player for companies and investors. 

Everything Starts with Regulations 

The Rise of Cryptocurrency in Serbia

If you want to turn your country into a crypto-friendly place, you will need regulations. That’s how the city of Dubai became such an interesting place for many investors and passionate companies, by quickly adopting many regulations in favor of the Web3 industry. Portugal on the other hand is keeping a non-regulation policy that has attracted many people but is slowly changing this situation and is being pushed by the European Union and the future MiCA law to regulate the Web3 market. 

That’s exactly what Serbia did. The law, known simply as the “Digital Assets Law,” came into effect on Tuesday, December 29, 2020, and was implemented by mid-2021.

With the new rules in place, Serbia allows crypto service providers to operate in the country. Of course, they will first have to get permission from the country’s supervisory authority. These include the National Bank of Serbia (NBS), as well as the local securities commission.

Digital assets can be issued in the country with or without an approved white paper. However, developers who do not have an approved white paper cannot advertise their digital assets in Serbia. The number of such assets that can be shared with the public is limited.

The new Serbian law also covers cryptocurrency trading. Digital asset platforms must obtain a license to operate. In addition, secondary trading of cryptocurrencies issued in Serbia, the use of smart contracts in secondary trading, and trading on an over-the-counter (OTC) market are also permitted by law.

Then You Need a Community 

The Rise of Cryptocurrency in Serbia

Once you have the regulations in place, you need people, companies, and projects to develop the Web3 industry in your country. Luckily for Serbia, the country is already full of engineers and developers. 

Here are a few numbers around the importance of the developer and IT culture in Serbia. The ICT sector now accounts for 10 percent of the country’s GDP,  making it among the top four export sectors. According to Serbia’s Statistics Office, there were over 3,354 firms in Serbia’s tech sector in Q1 2022, which employed 47,609 people. 

Therefore, it is not surprising to see more and more Web3 companies being created in the country. Just recently Serbian blockchain development platform Tenderly secured a $40M Series B investment round. Additionally, organizations like the Serbia Blockchain Association are helping many companies and investors to better understand Web3 possibilities and how Serbia could be a strategic place to invest. Serbia also has its own exchange, ECD, that started to introduce some Bitcoin ATMs within the country and is pushing for adoption. 

Serbia is also starting to host more and more crypto events. Last summer the TMRW Conference kicked off with a 2-day event in Belgrade, the capital city of Serbia, with more than 20,000 attendees and several talks around crypto, metaverse, and NFT. After the success of the first round, the TMRW Conference 2023 has been announced. 

In an interview, the president of the Serbia Blockchain Association Mladjen Merdovic declared that Serbia is becoming the place to be if you want to start your project in Web3 for the following reasons: “Technical knowledge combined with hard work, innovative ideas from Serbian entrepreneurs, and all this linked to affordable costs makes Serbia a great place to start your Web3 business from scratch. We have seen a huge jump in the number of companies founded since 2020 and most of them are actually from the Web3 space. So, the question is not WHY, but WHEN.”

Strong Support from the Population and Big Names

The Rise of Cryptocurrency in Serbia

As we can see in El Salvador, to reach strong adoption you need to have the support of the population and of important people in the country. Serbia’s best Bitcoin ambassador is not its president, like in El Salvador, but its Prince! 

In an exclusive interview with Cointelegraph, Prince Philip Karageorgevitch, Hereditary Prince of Serbia and Yugoslavia, explains his reasons for being bullish on Bitcoin.

During a TV interview, the hereditary prince was asked about his thoughts on cryptocurrency. “Bitcoin is freedom, and this is something I want for everyone, it is censorship-free. It is very fungible, you can move it around. It’s what will help people’s individual sovereignty again, and this helps with people’s freedom,” the Serbian heir apparently added.

It is difficult to know exactly how many people own cryptocurrencies, as multiple wallets can be created by the same person and localization is not linked to a wallet, therefore only centralized exchange can be sure of this number but, less than one year ago there were an estimated 200,000 people in Serbia who owned cryptocurrencies, out of a population of more than 7 million people. 

Adoption in the Whole Region

The Rise of Cryptocurrency in Serbia

Nevertheless, it’s not only in Serbia that crypto is booming, it’s everywhere in the Balkan region. The best example would be the recent interest in Web3 from Montenegro, a neighboring country. In April 2022, Montenegro offered citizenship to Vitalik Buterin, the co-founder of Ethereum (ETH). The move symbolizes the country’s commitment to becoming one of the leaders in blockchain. On Buterin’s advice, the Montenegrin government has notably pledged to put in place “attractive” legislation to entice crypto-asset companies.

“Montenegro aspires to become an innovation center for blockchain technology,” said Minister of Finance Milojko Spajić. One of the first steps will be to create a regulation that will frame the use of blockchain in the country and reduce the risks of illegal activities.

The situation is more complicated in Kosovo, since January 2022 Bitcoin miners had to stop their lucrative activity. Indeed, the Serbian minority living in the north of Kosovo was not paying electricity to the government of Kosovo, since the separation of the country from Serbia. This geopolitical situation created an opportunity for Bitcoin miners to mine Bitcoin for free. Now that the tension is even stronger, mining has been banned in the country and miners are selling their equipment, ending the area of Bitcoin mining in the Balkans. 

Other crypto services are already in place in the Balkans. For example, in Bulgaria, it is now possible to receive compensation in BTC in case of a delayed flight. In Croatia, the local authorities in Zagreb have implemented a system that allows you to pay crypto in many stores.

Slovenia is certainly the most crypto-friendly of all Balkan countries. At present, there are more than 1,000 places where the use of crypto is possible. Some major companies like Burger King accept Bitcoin payments, for example.

The Case of Liberland

The Rise of Cryptocurrency in Serbia

As if all of these points were not enough, there is even a micronation within Serbia that is more crypto-friendly. Welcome to Liberland. 

Liberland is a small unrecognized country on the border between Serbia and Croatia. In 2015, this small country adopted Bitcoin as its legal currency. In an interview,  Joey Langenbrunner, Deputy Representative of the Free Republic of Liberland to the United States of America explained how difficult it was to set up an official bank account for a sovereign country, however, Bitcoin was the means by which they could acquire much of their funding and also manage their financial affairs.

Langenbrunner explained that when they went to El Salvador in November 2021 for the Adopting Bitcoin Lightning Summit, President Jedlička actually crossed the border into El Salvador by presenting his Liberland passport and they stamped it.

Serbia is therefore developing its legal, social, and economic structure in order to become an important player in the Web3 industry. Adoption always takes time, but being ahead of the curve and innovative are some of the most important aspects, and Serbia has understood that perfectly.

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