The National Bank of Serbia (NBS) issued its first statements on bitcoin earlier this month, echoing familiar warnings issued by central banks around the global.
Citing statements from the European Banking Authority, the NBS confirmed that bitcoin is not considered legal tender under the country’s laws, that banks and licensed exchange dealers are prohibited from transacting in bitcoin and that consumers who choose to use digital currency do so at their own risk.
While not the progressive action many in the central European nation had hoped for, members of the local bitcoin community told CoinDesk that they were pleased by the bank’s official recognition of digital currency, describing it as the best possible outcome given the more reactionary actions observed around the world.
Aleksandar Matanovic, a Serbian resident and founder of digital currency exchange and bitcoin ATM operator Bitcoin 365, told CoinDesk:
“The more modern and open-minded approach would have been a huge surprise, having in mind that Serbia is very slow with adopting innovations, especially in the field of finance.”
Though it won’t likely have a lasting impact on the global regulatory conversation, the announcement could do much to encourage the local community to be more active in advocating for bitcoin and its potential benefits.
Serbia’s economy has been adversely affected by years of political turmoil, and was most recently hampered by costly and damaging flooding this summer. Further, its payments ecosystem remains underdeveloped, with a PayPal delegation only visiting the market for the first time in April to discuss whether it would allow local residents to begin receiving money through its service.
Community readies for offensive
A local Bitcoin Foundation member, who wished to be identified only as ma∆∆a, described the local bitcoin community as appealing to “geeks only”, but both he and Matanovic suggested that the central bank warning may galvanize the community to better advocate for bitcoin domestically.
Ma∆∆a cited the ongoing conversation surrounding New York’s proposed BitLicense as a potential first step, as its regulations could potentially be applied in Serbia in the future.
With the central bank’s statement issued, Matanovic indicated that Serbia’s Ministry of Finance could be encouraged to learn more about the technology. Beginning this conversation with the financial regulator will be the focus of an advocacy group that he wishes to start.
“A group of bitcoin enthusiasts are in the process of establishing a bitcoin association here,” Matanovic said. “We will give our best to promote bitcoin, raise the awareness and educate people about using it. One of the goals would be to try to talk with Ministry of Finance in attempt to regulate bitcoin, so businesses can start using it.”
Until there are more safeguards for local users, ma∆∆a said, bitcoin adoption is likely to remain low.
“I have to agree with the noted in the warning, that bitcoin without the insurance is only for tech savvy people,” he added.
Bitcoin ecosystem unaffected
Matanovic told CoinDesk that he doesn’t believe the statement will have a measurable effect on the country’s local bitcoin ecosystem. For now, he notes, buyers, investors, miners and traders are all free to continue their activities.
“All those users have already been aware of the risks, so I really doubt this warning would change anything for them,” he said.
However, Matanovic suggested that those who are unfamiliar with digital currency or its potential benefits may be turned away by the statements.
“[The] majority of the people here like to have money in their hands, they don’t even trust banks, especially not some ‘virtual money schemes’,” he said, emphasizing a description used by the NBS.
Ma∆∆a suggested that bitcoin businesses will be affected the least, though this is because there are so few that operate locally. He said that there are currently no homegrown services or products for the country’s bitcoin ecosystem, just some local exchange points and one restaurant, Appetite in Belgrade, which also hosts the bitcoin ATM operated by Bitcoin 365.
Matanovic indicated that his startup will be unaffected by the decision, as though its team works in Serbia, it doesn’t intend to base its business operations there when it opens to the public in 2015.
High hopes for bitcoin
Matanovic suggested that Serbia could have a powerful incentive to adopt bitcoin payments, due to the fact that its financial infrastructure lags behind international offerings.
He told CoinDesk that traditional remittance offerings from MoneyGram and Western Union are only sparsely available, and that most locals don’t use credit cards:
“Things like PayPal or Skrill are almost not used here, so people would have no problem abandoning those things (since they have never adopted them), going directly to bitcoin and jumping over one evolutionary step (centralized online payment systems) of payment systems.”
Matanovic concluded by acknowledging the work the local community has ahead.
“Besides government support, a lot of promotional and educational activity would be needed to encourage people to use it,” he said. “It’s a tough task, but not impossible I hope.”