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Market security of digital assets – cryptocurrency in Bosnia and Herzegovina

First and foremost, it should be emphasized that cryptocurrencies are not processed or controlled by any public authority. This digital asset generally has no basis in real property with corresponding value. The value of cryptocurrencies has been shown to be often variable.

In Bosnia and Herzegovina, digital assets are not legally regulated and are generally treated like any other asset under the Law on Obligations. However, the regulation of the existing cryptocurrency market system brings about anarchic behavior of participants because natural laws largely regulate digital assets as such.

Outside of the technical aspect, cryptocurrencies are difficult to consider as money given the obligatory epithets they carry – volatility and insecurity. As mentioned earlier, cryptocurrencies are not tied to real property, and for example, a long-term commodity trader on a certain cryptocurrency market cannot consider cryptocurrency a valid means of exchange except in the case of securing them for the dollar or another currency. Therefore, it is important to be aware of the risks of transactions with cryptocurrencies, regardless of the role presented in the transaction.

Blockchain is the system on which cryptocurrencies operate. In the future, blockchain may be presented as a tool that will challenge all existing centralized data registers and through which elements of the transaction, who owns it, who paid, and executed the transaction of the asset can be recorded, all without a central public ledger or central authority for tracking. The aforementioned system can change the role of any data registry in the world, especially since it represents the most secure database because it cannot be hacked, manipulated or subject to attack as traditional databases are. Therefore, data found in this database is immutable. If we imagine land registry records or voting ballots without the possibility of change, a reflection of the principle of trust in public ledgers and registries would be represented.

Cryptocurrency is not regulated from the aspect of direct and indirect tax regulations. Since it is not legally regulated, from the aspect of direct taxes, the highest probability is that income earned from cryptocurrency trading is interpreted in practice as income from capital investment, taking into account that it is an initial investment and later trading as the basis for income. In that case, tax implications are 10% of the income earned if it is declared.

It should be noted that another interpretation cannot be excluded, especially if the regulations and practices in the Federation of Bosnia and Herzegovina are in question. Namely, income earned from cryptocurrency trading in the Federation of BiH can be interpreted as income from independent activity, where the taxpayer must pay contributions on the amount of that income in addition to taxes.

 

Keywords: cryptocurrencies, crypto assets, digital assets, tokens, blockchain, cryptocurrencies in Bosnia and Herzegovina, cryptocurrency market, tax.

The expressed opinion does not represent advice, but the opinion of the author, taking into account individual case specificities.

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