Montenegro's potential to transform into a crypto haven hinges on a new law aimed at governing the digital currency market.
Pending the law, crypto exchanges thrive, properties are listed for crypto, efforts to mine digital currencies persist, and the first crypto ATM has been installed.
The government once established, then disbanded, a Cryptocurrency and Blockchain Directorate.
Cryptocurrency figure Hjeong Do Kwon, upon his arrival in Montenegro, was detained and awaits extradition for alleged fraud.
Ethereum's founder, Vitalik Buterin, received Montenegrin citizenship. Simultaneously, the Central Bank of Montenegro engaged in talks with Ripple.
Cryptocurrency analyst Novak Svrkota explains that Montenegro, lacking specific laws or a mature market for cryptocurrencies, has attracted significant industry names. He credits this to a tight-knit, well-connected community.
Svrkota, formerly of the Government's Blockchain Directorate, shares the vision of shaping Montenegro into a crypto-friendly haven, citing restrictive laws in other nations as a hindrance.
Understanding Cryptocurrencies and Blockchain
Cryptocurrencies are digital currencies without physical counterparts like bills or coins.
Bitcoin, launched in 2009, is the most renowned cryptocurrency. It peaked in value in November 2021 at $69,045 and is currently valued at $42,682.
Bitcoin is among many cryptocurrencies linked to the blockchain, a virtual transaction ledger on the Internet.
Government Support for a Crypto-Friendly Montenegro
In 2021, then Finance Minister and current Prime Minister Milojko Spajić introduced the concept of Montenegro entering the cryptocurrency arena, leading to the formation of the Directorate for Cryptocurrencies and Blockchain.
A 2022 conference on new technologies and blockchain, attended by Ethereum founder Vitalik Buterin, was held in Luštica. The same year, Buterin became a Montenegrin citizen.
The Central Bank of Montenegro collaborated with Ripple in 2022 to pilot Montenegro's first digital currency.
Hjeong Do Kwon's Arrest in Montenegro
Do Kwon, a notable cryptocurrency figure, was arrested in Montenegro for possessing a forged passport. He is implicated in fraud cases involving his Luna and Terra cryptocurrencies, causing over $40 billion in investor losses.
Prime Minister Spajić admitted to meeting Do Kwon prior to learning of his international warrants.
Mining Continues in Montenegro
Despite being less profitable recently, cryptocurrency mining still exists in Montenegro. In early 2023, Serbian authorities intercepted an individual attempting to smuggle mining equipment into the country.
In 2020, two people were arrested for illegal electricity use in cryptocurrency mining, not for mining itself.
IT expert Boris Radović recounts his personal, unprofitable experience with mining.
Tivat's First Crypto ATM In Tivat, a cryptomat was installed in the Porto Montenegro complex but was never operational. Legal uncertainties prevent its use, as confirmed by the owner's lawyer, Ratko Pantović.
Trading and Selling in Digital Currency
Svrkota highlights two aspects of cryptocurrency use: trading on crypto markets and using digital currencies for payments. He notes the popularity of crypto in real estate transactions, especially among those from sanctioned countries like Ukraine and Russia.
Market Fluctuations in Cryptocurrency
Marija from Podgorica shares her profitable Bitcoin investment, while Boris Radović talks about the unpredictability of cryptocurrency values.
Radović emphasizes the anonymous nature of cryptocurrency transactions, which has historically facilitated criminal activities.
Montenegro's unregulated cryptocurrency market results in lost state revenues and lacks security for businesses and investors. The Ministry of Finance is working on a law to regulate digital assets, aligning with EU standards.
The Central Bank is also aligning with EU regulations (MICA) but cautions investors about the risks involved in cryptocurrency trading.
The European Commission's 2022 recommendations urged Montenegro to bolster its capabilities to track and analyze illegal financial flows involving cryptocurrencies.
In 2023, the EU introduced laws for tracking crypto-assets to combat money laundering and other crimes. The U.S. Treasury Department has also taken steps to prevent illegal cryptocurrency use.
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