The Republic of Serbia Says Bitcoin is Not Legal Tender

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Serbia Issues Warning against Bitcoin

Yesterday, ForexMinute reported how Portugal issued a warning against the digital currency. Now, the new country in the list is the Republic of Serbia which says that as Bitcoin is not a legal tender; the users should keep distance from it. The NBS says that Bitcoin, a virtual currency, a form of unregulated digital money, is neither issued nor backed by a central bank.

In the announcement the agency says that virtual currencies such as Bitcoin can be bought in exchange for conventional fiat currencies such as the euro, pound sterling or US dollar directly from another person or in exchange platforms. Also, Bitcoins are held in personalized Bitcoin accounts known as digital wallets.

The agency says that though Bitcoin can be used as a means of payment for goods and services and can be converted back into fiat currencies, these are extremely volatile and potential for being used in contraband activities. It looks the agency in Serbia has taken clues from Silk Road, the notorious drug peddler which has now shut its operations.

Silk Road was shunted down by the federal agencies in the US after its owner was caught accepting Bitcoin for some illegal drugs. Taking the clue from Silk Road a lot of government agencies around the world have issued warning against the user of the digital currency as they fear such online ventures may float in with the help of Bitcoin.

Even the European Banking Authority Issued Similar Warning Last Year

In its notification the NBS says that Bitcoin exchange platforms where virtual currencies are converted into conventional fiat currencies are, as a rule, unregulated and their users are not protected from trade-related risks. Also, the users do not have any legal protection if the platform loses money or fails.

A lot of instances when Bitcoin exchanges have lost their deposits due to hacking and other attempts show that the NBS is not wrong after all. Mt. Gox in fact collapsed after it reported that it lost millions of worth of Bitcoin. Thousands of investors lost their valuable deposits with Mt. Gox and still waiting for justice.

The inherent risks involved in Bitcoin have prompted even the European Banking Authority, as an independent authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector so as to maintain financial stability, issue a warning in late 2013 to highlight the risks consumers may face.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com