While waiting for the law, transactions are carried out on crypto exchanges in Montenegro, real estate is offered for cryptocurrencies, there have been attempts to mine (production) electronic money, and the first crypto machine has been installed, writes Radio Free Europe.
And the Government had formed, then shut down, the Directorate for Cryptocurrencies and Blockchain.
The founder of one of the strongest cryptocurrencies, "Ethereum", Vitalik Buterin received Montenegrin citizenship, and the Central Bank of Montenegro negotiated cooperation with "Ripple", a provider of crypto and blockchain solutions.
The so-called cryptocurrency king Hyeong Do Kwon also came to Montenegro, but he was arrested and is awaiting extradition on international warrants for fraud.
Answering the question where do the big names of the crypto industry come from in Montenegro, which does not even have a law in that area, nor a developed market, cryptocurrency analyst and former member of the abolished Government Blockchain Directorate, Novak Svrkota, tells RFE/RL that it is a relatively small but well-connected community.
"We came up with the idea of creating a crypto paradise in Montenegro. The crypto community is looking for a small country that is open and could bring crypto friendly laws, because the current laws in some countries are quite restrictive," he points out.
Mining in Montenegro
The possibility of creating new virtual coins through so-called mining has not completely disappeared in Montenegro, although it has been unprofitable for the last few years, according to Radio Free Europe interlocutors.
In mid-January of this year, Serbian citizen KD tried to bring crypto-currency mining equipment worth almost seven thousand euros into Montenegro. This was thwarted by customs officials and border police.
Cryptocurrency mining was first discovered in 2020 when the police arrested two people and seized 250 computers in the basement of a building in Podgorica. The arrest was not due to "mining", but due to the long-term illegal use of electricity to "mine" cryptocurrency. The defendants were only responsible for stealing electricity.
IT expert Boris Radović reminds Radio Free Europe that cryptocurrency could once be earned by "mining", that is, by computer "solving" mathematical equations, which required specialized hardware, a huge amount of electricity and time. Cryptomining, he says, has been unprofitable since its initial expansion, today due to high costs and low profits.
Kryptomat in Tivat
A crypto machine, a device for exchanging virtual money, was found in Tivat last year. It was housed in the private club Salon Prive, in the luxury complex Porto Montenegro. The owner, Yong Hon Kong, of Malaysian origin, told the police that he legally acquired and imported the device, but that it was never put into operation for technical reasons.
In a statement to the police, which Radio Free Europe had access to, Kong explained that he tried to check the legal framework for setting up crypto machines in the government, but that his lawyer was told that this area is not regulated in Montenegro, which is why "it cannot be approved , but not to prohibit its installation and operation".
The Government of the time announced that it was an illegal device.
"There is no legal basis to carry out that trade." Everything related to trade through that device is illegal," said the then Minister of Finance Aleksandar Damjanović.
Congo's lawyer Ratko Pantović confirmed to Radio Free Europe that the device is still in Tivat. No proceedings have been initiated against his client because there is no legal basis for it.
Law in announcement
Due to the fact that the field of cryptocurrencies in Montenegro is not legally regulated, the state is losing money.
"The state loses because it has no control over money flows and no tax benefits." Regulation would bring some security to companies and people who deal with it and an incentive to develop business. And it would give the banking sector free rein to provide services for cryptocurrency exchange or investment," says Svrkota.
The Ministry of Finance did not respond to RSE's question whether the government is preparing a law that would regulate the cryptocurrency market, and what is the volume of electronic money trade in Montenegro.
In the recommendations of the European Commission report from 2022, it is stated that Montenegro must strengthen its capacities in order to determine and analyze illegal financial flows with cryptocurrencies. The European Commission did not repeat this recommendation in the 2023 report.
In March 2022, the European Union announced measures against the possible use of cryptocurrencies in illegal trade. In June, it introduced new laws to ensure that "crypto-assets will be tracked and identified to prevent money laundering, terrorist financing and other crimes."
And the United States Treasury Department has taken steps to prevent the illegal use of cryptocurrencies.
Read the full text at CSR
