Crypto License in Bosnia and Herzegovina
Bosnia and Herzegovina (BiH) offers a favorable investment climate, especially for the IT and cryptocurrency sectors. Although there is no specific licensing regime for cryptocurrencies, companies must comply with general financial and anti-money laundering laws. With the upcoming MiCA regulation in the EU, BiH could be an attractive alternative for VASPs. Gofaizen & Sherle experts are available to assist with registration and licensing for cryptocurrency activities in this and other jurisdictions.
Bosnia and Herzegovina is a small state on the Balkan Peninsula known for its rich history and complex political structure. Located in the western part of the Balkans, the country borders Croatia, Serbia and Montenegro. The history of Bosnia and Herzegovina includes the periods of the Ottoman Empire, Austria-Hungary, and Yugoslavia.
The country’s political system was shaped by the Dayton Agreement, which ended the Bosnian War and divided the country into the Federation of Bosnia and Herzegovina and the Republika Srpska. The country’s culture combines elements of Eastern and Western civilizations, which makes it attractive to tourists who come to enjoy the beauty of nature, historic cities, and unique culture.
Today, Bosnia and Herzegovina aspires to join the European Union and is a developed country with a favorable business environment, seeking international cooperation and attracting foreign investment. It offers a favorable environment for doing business and attracting foreign investment, especially in the IT and cryptocurrency sectors.
Cryptolicense holders in Bosnia and Herzegovina can engage in the following activities:
- exchange of virtual currencies for fiat currencies;
- conversion of virtual currencies;
- secure transfer of cryptocurrencies;
- organization of trading platforms;
- storing virtual currencies in custodial wallets;
- providing financial services related to the offer and sale of virtual assets.
All cryptocurrency activities must comply with the requirements of the AML Law and general FATF recommendations, which require strict compliance with anti-money laundering and anti-terrorist financing regulations.
Gofaizen & Sherle is ready to offer you full assistance in obtaining a crypto license in Bosnia and Herzegovina, providing professional support at every stage of the process.
Advantages of obtaining a Crypto License in Bosnia and Herzegovina
Short registration time
Setting up a company in Bosnia and Herzegovina is quick due to the simple registration process. In Republika Srpska, companies can start operating in just a few days.
Attractive tax system
Bosnia and Herzegovina offers low tax rates: profit tax is only 10% and there is no tax on dividends. This allows cryptocurrency companies to reduce their tax burden and offer more favorable terms to customers.
Convenient location in Europe
The country borders several European countries and has direct ties with the European Union. This facilitates business travel and expands business opportunities.
Freedom from strict EU requirements
At the same time, Bosnia and Herzegovina is not a member of the EU, which allows it to offer a more flexible business environment without having to comply with strict requirements such as MiCA.
Low capital requirements
Cryptocurrency companies can start their operations with minimal capital contributions, which reduces risks for international entrepreneurs.
Wide range of opportunities
Cryptocurrencies can be exchanged, stored, and transferred, and ICOs can be organized, allowing for a wide range of services.
No need for a physical office
In the Federation of Bosnia and Herzegovina, companies can operate without the need to maintain a physical office, which reduces operational costs.
What should be taken into account before starting a crypto business in Bosnia
Bosnia and Herzegovina (BiH) consists of two entities: the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS), and the Brcko District (BR). The country is governed at several levels, where each entity has significant autonomy, including the regulation of financial and economic matters.
In Republika Srpska, cryptocurrencies were officially recognized in 2022 by the Securities Market Law, making it the only entity in BiH with established legislation in this area. Virtual currency in RS is defined as a digital record of value that is not guaranteed by a central bank or other public authority but can be used as a medium of exchange. Earlier (in 2020), the Law on Digital Assets was adopted here, establishing some rules in this area.
The Federation of Bosnia and Herzegovina, unlike RS, has not recognized cryptocurrencies at the legislative level. The FBiH Ministry of Finance does not regulate cryptocurrency exchanges and does not recognize cryptocurrencies as a means of payment.
The prospects for cryptocurrency business in BiH may depend on future changes at the European Union level. There are ongoing negotiations aimed at regulating cryptoasset markets, which may affect BiH as well. The introduction of uniform rules and stricter regulation in the EU may create a legal framework for cryptocurrency businesses in FBiH and RS, but the timing of the introduction of these changes is still unknown.
Cryptocurrency rules and documentations in the BiH
To date, there is no specific legislation regulating cryptocurrencies in Bosnia and Herzegovina, except for the recognition of virtual currencies at the level of Republika Srpska. However, as of February 2024, the new Law on the Prevention of Money Laundering and Terrorist Financing (AML/CFT Law) introduced the concept of VASPs (Virtual Asset Service Providers), which is an important step in the regulation of cryptocurrency activities. The Law aims to align BiH’s legal and regulatory framework with the main standards of the European Union, including Regulation (EU) 2018/1672 Directives (EU) 2015/849, and (EU) 2018/843.
Bosnia and Herzegovina does not have a separate license for cryptocurrencies, but cryptocurrency companies are required to register with the Securities Commission. They must also comply with the anti-money laundering and anti-terrorist financing regulations set out in the AML/CFT Law mentioned above. These regulations include:
- conducting risk assessments;
- establishing policies and procedures to prevent money laundering;
- identifying and monitoring customers;
- reporting of transactions and assets.
As mentioned above, the current legislation of Republika Srpska regulates cryptocurrency-related activities under the Digital Assets Law 2020 adopted here, which legalizes the possession and trading of digital assets, including virtual currencies and digital tokens. The Securities Market Law defines rules for mining, providing advisory services, organizing trading platforms, and storing digital assets.
At the federal level, in Bosnia and Herzegovina, the situation remains uncertain. While possible legislative changes are being discussed, particularly in Republika Srpska, the issue has not yet been regulated at the level of the Federation of Bosnia and Herzegovina. The issue of cryptocurrency regulation in FBiH and RS is under scrutiny by various authorities. In Republika Srpska, a draft law on cryptocurrencies is being considered in the National Assembly. In the Federal part of the country, the Banking Agency (FBA) also expresses its readiness to support legislative changes by international standards and EU directives, but so far their competence does not extend to the regulation of cryptocurrencies.
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Legal acts applicable to crypto companies
In Bosnia and Herzegovina, apart from the mentioned Law on Digital Assets and the Law on Securities Market adopted in RS, there are no specific laws or regulations directly regulating cryptocurrency companies. However, some existing laws may indirectly apply to this area:
The activities of foreign cryptocurrency companies in Bosnia and Herzegovina (BiH) may be regulated by several laws and regulations, although there are no specific laws that directly address cryptocurrencies. The main legal acts that may indirectly affect the activities of such companies include:
- Law on the Central Bank of Bosnia and Herzegovina (Official Gazette of BiH No. 1/97). Defines rules regarding monetary policy and the work of the Central Bank, which may relate to foreign currency transactions.
- Law on Banks in the Federation of Bosnia and Herzegovina and Republika Srpska (Official Gazette of the Federation of Bosnia and Herzegovina, No. 27/17). Regulates banks that may deal with or provide services related to cryptocurrencies.
- Law on Combating Money Laundering and Financing of Terrorism (Official Gazette of BiH, No. 47/14). Establishes customer identification and suspicious transaction reporting requirements that may apply to foreign cryptocurrency companies.
- Law on National Payment Transactions (Official Gazette of the Federation of Bosnia and Herzegovina, No. 48/15). Regulates payment systems and may address methods of processing cryptocurrency transactions.
- Law on Deposit Insurance in Banks of Bosnia and Herzegovina (Official Gazette of BiH, No. 32/20). Although not directly related to cryptocurrencies, this law establishes rules to protect customer funds.
- Law on Foreign Economic Activities (Official Gazette of BiH). Regulates the general principles of foreign economic activity, including the operation of foreign companies in the territory of BiH.
- Law on Consumer Protection. If a cryptocurrency company provides services to consumers in BiH, it may be subject to the provisions of this law.
- General commercial legislation. Any commercial activities related to cryptocurrencies, such as exchange transactions or mining, must comply with general commercial law requirements.
Also, foreign cryptocurrency companies must consider local business registration and company taxation requirements.
It is important to keep track of legislative changes as Bosnia and Herzegovina is on the path towards stricter regulation of cryptocurrencies due to trends within the European Union.
Requirements associated with a crypto trading business in the B&H
Registration of a legal entity
It is necessary to register a company in Bosnia and Herzegovina. Foreign companies cannot yet obtain such a license.
Bank account
Once the company is registered, it is necessary to open a special bank account in the Bank of Bosnia and Herzegovina to deposit the authorized capital. Later, after registration, the company will be able to open accounts in any other state.
Internal AML/KYC regulations
Each virtual asset service provider is required to develop internal anti-money laundering (AML) and Know Your Customer (KYC) compliance policies. These documents must comply with local laws and FATF guidelines and can be prepared in English.
Requirements for a company director
As for the company director, he or she does not have to be employed and receive a salary, however, he or she must have a work permit in Bosnia and Herzegovina or be a resident. It is important to note that the director is not required to become a tax resident and reside in Bosnia and Herzegovina for more than 180 days.
MLRO requirements
The company is required to appoint a local employee responsible for anti-money laundering (AML) compliance and customer due diligence (KYC) procedures. The anti-money laundering officer (MLRO) must be employed under an employment contract and his/her qualifications and experience will be a significant advantage.
Relationship with public authorities
In addition, the legal entity should be registered with the tax authorities, the statistical office, and the Securities and Exchange Commission. Depending on the nature of the business, additional permits or licenses may be required from other state authorities.
Responsibilities for crypto companies in Bosnia and Herzegovina
The main obligations of cryptocurrency companies licensed in Bosnia and Herzegovina include:
- legal compliance – companies must comply with all applicable laws and regulations, including in the area of anti-money laundering and countering the financing of terrorism;
- having an AML/KYC system in place – companies must implement and comply with an effective AML/KYC system to identify their customers and monitor their transactions;
- record-keeping – companies must maintain accurate and detailed records of their activities, including information on their customers and transactions;
- cooperating with governmental authorities – companies must cooperate with governmental authorities in monitoring their activities;
- appointment of a responsible person – companies must appoint a responsible person to oversee AML/KYC compliance issues.
Despite certain requirements, the legal framework for cryptocurrency regulation in Bosnia and Herzegovina continues to evolve. Therefore, companies are advised to regularly monitor changes in legislation and consult with legal counsel for up-to-date information.
Risks of crypto assets in Bosnia
Investing in cryptocurrencies in Bosnia and Herzegovina involves several significant risks due to the lack of clear and comprehensive legislation governing this area. The main risks include:
Lack of a special license
Bosnia and Herzegovina lacks a special license for cryptocurrency operations, which creates uncertainty for investors and companies operating in this field.
Uncertain legal status
The legal status of cryptocurrencies in the country is unclear. The lack of clear rules and regulations makes investing in cryptocurrencies a risky venture.
Disagreements at the federal level
There are disagreements between the two entities of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina and Republika Srpska, regarding the regulation of cryptocurrencies. This leads to additional legal uncertainty.
Fraud risk
Lack of regulation creates a favorable environment for fraudulent schemes related to cryptocurrencies. Investors may fall victim to fraudsters offering dubious investment projects.
Restrictions by banks
Many banks in Bosnia and Herzegovina refuse to conduct transactions related to cryptocurrencies, citing the lack of relevant legislation and current regulations to prevent money laundering. This creates difficulties for investors wishing to buy or sell cryptocurrencies.
Tax risks
Taxation of income from cryptocurrency transactions in Bosnia and Herzegovina is not clearly defined. The lack of clear rules may lead to tax disputes and additional financial costs for investors.
As a result, users of crypto assets in Bosnia and Herzegovina face significant risks associated with the legal and financial uncertainty of cryptocurrency in this jurisdiction.
Crypto Company registration in Bosnia
Registering a company in Bosnia and Herzegovina involves several key steps:
Selecting the type of company.
step 1
The first step is to determine the type of legal entity you wish to register. The most common forms are limited liability company (društvo sa ograničenom odgovornošćću, d.o.o.) and joint stock company (akcionarsko društvo, a.d.).
Preparation of documents.
step 2
It is necessary to prepare and collect all necessary documents, including the company’s articles of association, the decision on the establishment of the company, identification documents of the founders, and information about the director.
Opening a bank account.
step 3
A temporary bank account must be opened in the name of the company to deposit the authorized capital. Usually, banks require a minimum deposit (from 500 Euros, or about 553 US Dollars) to be deposited into this account.
Registration with state authorities.
step 4
Once all documents have been prepared and a bank account has been opened, it is necessary to register the company with the following authorities:
- Registrar of Companies – this body is responsible for the official registration of the company and issuing an extract from the register;
- Tax Service – registration with the tax authorities is mandatory to obtain a tax number;
- Federal Bureau of Statistics – registration with this bureau is required to obtain a statistical number.
Compliance with labor laws.
step 6
If the company hires employees, it is necessary to comply with labor laws, including registration of employees and payment of taxes and contributions to the pension fund.
Once all of the above procedures have been completed, your company will be officially registered and will be able to start operating in Bosnia and Herzegovina. It is important to remember that each step requires attention to detail and compliance with the law to avoid possible legal consequences.
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Steps to apply for a crypto licence in Bosnia
The stages of obtaining a crypto license in Bosnia and Herzegovina include the following steps:
Preparing a package of documents confirming the identity of the company founder.
First of all, it is necessary to collect and prepare KYC (Know Your Customer) information about the company founder. This information is used to prepare project documentation and plan the next steps.
Company registration and opening a corporate account.
To complete the incorporation of the company, a corporate bank account must be opened to deposit the authorized capital. We have described this stage in detail earlier.
Development of AML/KYC internal policies.
Creation and approval of internal documents regulating AML/KYC procedures in the company.
Appointment of MLRO.
The company is required to appoint a local money laundering reporting officer (MLRO). This officer is responsible for communicating with regulators, reporting suspicious transactions, and fulfilling AML requests. We can assist in hiring an MLRO if needed.
Certification as a VASP.
It is necessary to notify the Bosnia and Herzegovina Securities Commission of the company’s cryptocurrency activities. For this purpose, a complete application package should be prepared and submitted to the Commission.
Documents confirming the registration of the company:
- The company’s constituent documents (articles of association, decision on establishment, etc.);
- certificate of state registration of the company;
- extract from the commercial register;
- documents confirming the legal address of the company.
Documents confirming the financial position of the company:
- bank statements confirming the deposit of the authorized capital;
- company’s accounting statements (if available).
Documents identifying the founders and directors of the company:
- passports or other identification documents of the founders and directors;
- proof of legal origin of the funds used to establish the company.
Documents related to the company’s operations:
- description of the company’s business model;
- description of the products and services the company plans to provide;
- the company’s anti-money laundering (AML) and countering the financing of terrorism (CFT) policies;
- customer identification procedures (KYC);
- information on the internal control system.
Documents confirming the qualifications of employees:
- CVs and diplomas of employees responsible for carrying out crypto activities.
Other documents:
- documents confirming the lease of office space (if applicable);
- contracts with counterparties (if applicable);
- permits and licenses obtained from other government agencies (if required).
It is important to note that this list is indicative and may be supplemented or amended over time.
The company will then be certified as a Virtual Asset Service Provider (VASP).
Post-registration procedures
The final stage includes making minor notifications to other state authorities and final preparation of corporate documentation.
Remember that obtaining a crypto license is a complex and lengthy process that requires careful preparation and compliance with all formalities.
Taxation
The legislation of Bosnia and Herzegovina does not yet contain specific norms regulating the taxation of transactions with digital assets. Therefore, standard tax regimes are applied for crypto companies in Bosnia and Herzegovina. This creates certain complexities and uncertainties in the interpretation of tax liabilities related to cryptocurrencies.
The main types of taxes that may apply to cryptocurrency companies and their activities:
- Corporate income tax (CIT).
Crypto companies registered as legal entities and deriving income from cryptocurrency transactions are generally subject to CIT at the rate of 10%. At the same time, cryptocurrencies are treated as intangible assets.
- Personal Income Tax (PIT).
Individuals who receive income from cryptocurrency activities, including mining and trading, are liable to personal income tax at a rate of 10%. This tax is levied on the total income derived from such activities.
- Value Added Tax (VAT).
The standard VAT rate in Bosnia and Herzegovina is 17%. There are no special VAT rates for cryptocurrency transactions and they are taxed on a general basis like other commercial activities.
- Capital Gains Tax.
Capital gains derived from trading digital assets are taxed at a rate of 13%. This tax is levied on the difference between the selling price of the digital asset and its purchase price.
Certain income derived from trading in digital assets may be exempt from taxation, for example, profits from the sale or transfer of such assets are not included in the base for calculating annual personal income tax. Exchange and transfer operations involving virtual currencies are also exempt from VAT.
It should be remembered that tax legislation is constantly evolving, and in the future, new rules regulating the taxation of cryptocurrencies in more detail may be adopted.
Reporting requirements
Standard reporting requirements for ordinary companies in Bosnia and Herzegovina are regulated by the Law on Accounting. Companies are obliged to keep accounting records by accepted standards and submit financial statements to the tax authorities and other state structures.
The main types of reporting are:
- financial reporting – balance sheet, income statement, cash flow statement, and statement of changes in equity;
- tax reporting – declarations of income, value-added tax, and other taxes;
- statistical reporting – reports on the company’s activities for statistical authorities.
For cryptocurrency companies in Bosnia and Herzegovina, in addition to general reporting requirements, there may be additional requirements related to the specifics of their activities.
Additional requirements may include:
- cryptocurrency transaction reporting – detailed records of all cryptocurrency transactions, including buying, selling, exchanging and storing;
- customer reporting – customer information by anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements;
- suspicious transaction reporting – the obligation to report any suspicious transactions to the relevant authorities.
Given the relatively recent emergence of cryptocurrencies and the lack of state regulation of this area in BiH, the legislation in this area is still developing and the requirements may be clarified.
FAQ about Crypto license in Bosnia and Herzegovina
Who needs a cryptolicense in Bosnia and Herzegovina?
Any company conducting cryptocurrency-related activities in Bosnia and Herzegovina, such as trading, exchanging, or managing digital assets, is required to obtain a crypto license.
How does a business ensure compliance with AML and CTF regulations?
Businesses must implement robust anti-money laundering and countering the financing of terrorism (AML/CFT) policies and report any suspicious activity to the relevant authorities.
How long does it take to obtain a B&H crypto license?
The timeframe for obtaining a crypto license in Bosnia and Herzegovina can vary, but it usually takes a few weeks from application to license issuance.
What are the benefits of obtaining a cryptolicense in Bosnia?
Obtaining a crypto license in Bosnia and Herzegovina allows you to legally conduct cryptocurrency-related activities and gives you access to international markets while providing flexible taxation conditions and minimal capital requirements.
Why Choose B&H Crypto License Over EU Jurisdictions?
Choosing a crypto license in Bosnia and Herzegovina allows you to take advantage of the benefits of the European region without strict requirements such as MiCA, making this jurisdiction more flexible and attractive for businesses.
Is crypto legal in Bosnia and Herzegovina?
Cryptocurrency is not banned in Bosnia and Herzegovina, but its legal status remains unclear. There is no specific legislation to regulate cryptocurrencies at the federal level, although cryptocurrencies are officially recognized in Republika Srpska.
What is the cost of obtaining a crypto license in Bosnia and Herzegovina?
The cost of obtaining a crypto license in Bosnia and Herzegovina can vary depending on various factors such as the type of business and the package of services required. Typical costs include legal services, company registration, and fees associated with applying for a license.
Is Bitcoin legal in Bosnia?
Bitcoin is not banned in Bosnia and Herzegovina, but its legal status remains unclear. There is no specific legislation regulating the use of cryptocurrencies in the country.