National Bank of Serbia Declares Bitcoin Not a Legal Tender

The National Bank of Serbia (NBS) announced last week that Bitcoin is not legal tender in Serbia. As such, banks and licensed exchange dealers cannot have it subject to sales and purchases.

In a public statement, the NBS emphasizes that the Bitcoin’s value in exchange platforms is not guaranteed, adding that the “virtual currency” (its reference to Bitcoin) is pretty volatile. The NBS statement also declares that users of digital currency exchange platforms do not have legal protection should the exchange lose money or fail. This can be caused by hacking, for instance, “even if the platform is registered as an economic entity with the competent national body.”

The NBS added that the 2012 European Central Bank report stresses that Bitcoin does not have the required criteria needed to be considered electronic money.

Regarding Bitcoin payments in Serbia, NBS further declares that the dinar is the country’s legal tender under NBS law. As such, all cash liabilities from transactions made in Serbia are expressed in dinars and settled in dinar-denominated means of payment, unless another law demands otherwise.

Citing reasons in the statement “and the fact that there are no legal protection mechanisms,” NBS further warns that “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.”

Members of the Bitcoin community in the country, however, were pleased by the recognition given by NBS to the digital currency. Despite the fact that this was not the progressive action they were hoping for, the statement is regarded as the best possible outcome compared to the more reactionary measures seen nationwide.

Bitcoin 365 founder and Serbian resident Aleksandar Matanovic and a Bitcoin Foundation member identified only as ma∆∆a imply that the NBS warning could encourage Serbia’s Bitcoin community to advocate better the use of digital currency in the country.

Having been negatively affected by political turbulence for years now, Serbia’s economy was recently hit by costly summer floods, as per CoinDesk reports. The news group also noted that Serbia’s payment ecosystem is still underdeveloped. There was a PayPal delegation that visited the market for the very first time in April to discuss the possibility of allowing Serbians to begin money transactions through its service.

Matanovic, talking with CoinDesk, offered the suggestion that Serbia has a powerful incentive to accept Bitcoin as another payment option given the fact that the country’s financial infrastructure is lagging behind other global offerings. He added that traditional remittance offerings from Western Union and MoneyGram are not widely available and many do not have credit cards.

Matanovic thinks that the statement from the central bank will not have any measurable effect on the local Bitcoin ecosystem in Serbia, although people who are not familiar with digital currency or its potential benefits might be daunted by the warning.

He added that with the NBS warning, Serbia’s finance ministry might be encouraged to learn more about Bitcoin. Matanovic wishes to launch an advocacy organization that will start this kind of conversation with the ministry.

“A group of Bitcoin enthusiasts are in the process of establishing a Bitcoin association here,” Matanovic declared. “We will give our best to promote Bitcoin, raise the awareness and educate people about using it. One of the goals would be to try to talk with Ministry of Finance in attempt to regulate Bitcoin, so businesses can start using it.”

On the other hand, Matanovic told CoinDesk that adoption of the digital currency is likely to stay low until there will be more safeguards for local users of Bitcoin. He added that as noted in the warning, “Bitcoin, without the insurance, is only for tech savvy people”. 

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