The transitional and final provisions of the Law on Digital Assets, stipulate that entities that provide services related to digital assets are obliged to harmonize their business and general acts with the law and bylaws of the National Bank of Serbia and Securities Commission within six months from the day when the law entered into force (by June 29, 2021) and to apply for appropriate cryptocurrency licenses in Serbia.
The general idea of the legislator to leave the existing service providers a period of 6 months to harmonize their business with the Law on Digital Assets is quite reasonable, having in mind all the novelties that this law brings. However, two significant problems arose in practice with this plan.
The first problem is that not all bylaws have been passed yet, and the bylaws will largely specify the provisions of the law and the procedure of obtaining licenses for the provision of services related to digital assets. Specifically, the National Bank of Serbia has adopted a number of bylaws in mid-May that regulate digital assets in more detail, while the bylaws of the Securities Commission are still expected. That way, the providers of services related to cryptocurrencies are left with about a month and a half to fulfill the conditions prescribed by the bylaws of the National Bank of Serbia. On the other hand, providers of services who offer services related to digital tokens and other types of digital assets qualifying as financial instruments will be left with less than a month to fulfill the conditions that the Securities Commission shall prescribe if the Commission even adopts the bylaws in the period prescribed by the law.
The second problem refers to the existing service providers. Specifically, service providers are left with a deadline until June 29, 2021, (when the law will start to apply) to harmonize their business with the law and apply for a license for the provision of services related to digital assets.
When the Law on Digital Assets starts to apply (as of June 29, 2021), all entities that offer services related to digital assets will have to possess appropriate licenses, so as not to violate the provisions of the law and risk getting sanctioned. On the other hand, the competent authorities – the National Bank of Serbia and the Securities Commission cannot issue the necessary licenses to existing service providers before the law starts to apply, as they will not have a valid legal basis for this. If an adequate solution is not found by the beginning of the implementation of the law, this legal vacuum can pose quite a problem for the existing service providers who would in fact be forced to halt their business until they obtain the appropriate licenses.
In general, the adoption of the Law on Digital Assets is a good thing, since a new social phenomenon has finally been regulated. The downside is that there are still open issues, as was expected, having in mind that new legal institutions are being introduced and new asset classes are being regulated. We hope that the competent authorities will be more efficient in passing the bylaws, as well as in interpreting the regulations and their implementation since it seems that this will be a decisive factor for the “success” of this law.