Cryptocurrency Exchange in Serbia

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  1. What is a cryptocurrency exchange and what kind of services they provide?

Cryptocurrency exchanges are virtual, intermediary platforms that facilitate trade in digital currencies (cryptocurrencies). They represent a medium for the exchange of cryptocurrencies including the exchange of cryptocurrencies for Fiat currencies (USD, EUR, GBP etc.).

The great relevance of crypto exchanges in the field of crypto economy is the fact that without their services, the purchase and sale of cryptocurrencies for Fiat would be practically impossible.

There are two types of crypto-exchanges: centralized and decentralized.  In a centralized crypto-exchange, customers have a possibility to escrow Fiat currencies, which enables the customers to sell or buy digital currency for Fiat money. It means that each potential user could easily execute first cryptocurrency purchase. On the other side, decentralized crypto-exchange allow direct transactions between users, without centralized platform. Here, the users are obligated to trade strictly in digital currency, which is the key difference between the two types of crypto-exchanges.

Currently, most successful global crypto exchanges are: Binance, Coinbase Exchange, DODO, Uniswap (v3) etc.

  1. Legal Framework in Republic of Serbia

Law on Digital Assets (“Official Gazette RS No. 153/2020) (the “Law”), which applies from 29. June 2021 regulates crypto-exchanges and other digital platforms. The Law applies to many digital assets matter, such as issuance of digital assets, secondary trading in digital assets and provision of services in connection with digital assets in the Republic of Serbia. Important bylaw in the legislative framework is certainly Decision of National Bank of Serbia (“NBS”) on implementation of provisions of Law, regarding the granting of digital services license.

  1. How to Set up a Crypto-exchange?

The Law prescribes list of requirements which a crypto-exchange has to fulfil to obtain a subject license. A request for obtaining a license for crypto-exchanges activities is submitted to the NBS.

Crypto-exchanges operate in a form of a legal entity (i.e. limited liability company) engaged in the provision of services related to digital assets and therefore have to comply with the requirements regarding the minimal founding share capital (from 20.000 EUR depending on the type of services provided).

The Law provides additional requirements a crypto-exchanges must fulfil, including:

  • Company duly registered with the Business Register Agency;
  • All statutory general acts of a company;
  • Program of activities and business plan;
  • Planned measures for the protection of funds of digital asset users;
  • Organizational structure and internal control systems;
  • Planned staff training program in connection with digital asset transactions;
  • Data of persons who are members of board of directors and managers and specific requirements for their appointment
  • Data on person(s) with qualifying shareholding in the company and requirements for their appointment
  • Data on the external auditor of financial statements;
  • Data on persons closely related to the company and the description of such relationship.

NBS as competent authority shall decide on granting the crypto-exchange license within 60 days following the receipt of a duly completed application. If NBS dismisses the application, the applicant may not apply for a license for the provision of digital asset services for another year from such dismissal.

  1. Which are the benefits of founding a crypto exchange?

The crypto-exchanges are beneficial because they enable many forms of activities in the field of digital assets, such as

  • enable investments in cryptocurrency investment (Bitcoin – BTC, Litecoin – LTC, Ethereum – ETH)
  • exchange of cryptocurrencies for cryptocurrency and for Fiat currencies;
  • safekeeping of cryptocurrencies and review of user’s cryptocurrency portfolio;

Finally, what is important from aspect of crypto-exchange users it should be noted that the platforms are created to be very user-friendly, which means that the platforms allow their users simple and straightforward execution of transactions with digital assets.