Bosnia and Herzegovina

Disclaimer: The regulatory information provided below is for general informational purposes only and may not reflect the most current legal developments. Cryptocurrency regulations are rapidly evolving and can change frequently. This information should not be considered legal or tax advice. Before making any business or investment decisions, please consult with qualified legal, tax, or financial professionals familiar with your specific jurisdiction and circumstances. Always verify current regulations with official government sources and regulatory bodies.

Legal Classification & Regulatory Framework

Cryptocurrency Status

Bosnia and Herzegovina (BiH) presents a unique regulatory landscape for cryptocurrencies due to its complex governmental structure. The country comprises two main entities—the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS)—and the Brčko District, each with varying levels of regulatory development for digital assets.

Cryptocurrencies are not recognized as legal tender anywhere in Bosnia and Herzegovina. The Central Bank of Bosnia and Herzegovina (CBBH) has consistently maintained that the convertible mark (BAM) is the country’s sole legal currency. The CBBH has issued warnings since 2018 advising citizens about the volatility and risks associated with cryptocurrencies, and has stated explicitly that digital currencies cannot be exchanged directly with BAM through the banking system.

Despite not being legal tender, cryptocurrencies are not prohibited in Bosnia and Herzegovina. Individuals may legally own, hold, and trade digital assets. The Republika Srpska entity has taken the most progressive stance, formally recognizing virtual currencies in 2022 through amendments to its Law on Securities Market. Under this law, viLawal currency is defined as a digital record of value that has not been issued or guaranteed by a central bank or public authority, is not necessarily tied to legal means of payment, does not have the legal status of money or currency, but is accepted by physical and legal entities as a means of exchange and can be bought, sold, exchanged, transferred, and stored electronically.

At the state level, the Law on Prevention of Money Laundering and Financing of Terrorist Activities, adopted in February 2024, represents the first comprehensive BiH legislation to formally define virtual currencies and establish regulatory requirements for Virtual Asset Service Providers (VASPs). This landmark legislation classifies VASPs as obligated entities subject to know-your-customer (KYC), record-keeping, and suspicious transaction reporting requirements.

Tax Treatment

Bosnia and Herzegovina does not have specific legislation governing the taxation of cryptocurrencies. Instead, general tax laws apply to crypto-related income and gains. The tax treatment may vary between the different entities of the country, adding complexity to compliance requirements.

In the Federation of Bosnia and Herzegovina, the Tax Administration has interpreted cryptocurrency trading profits as income subject to the Income Tax Law. According to opinions issued by the Federation Ministry of Finance, cryptocurrency trading is treated as conducting an independent activity aimed at income generation, which may be either a primary or supplementary activity. This interpretation suggests that individuals who earn profits from crypto trading should report this income and pay applicable taxes.

The corporate income tax rate in Bosnia and Herzegovina is a flat 10%, which applies to profits generated from cryptocurrency-related business activities. This rate is notably competitive compared to many European jurisdictions. Cryptocurrency transactions, including exchanges and trading, are generally exempt from Value Added Tax (VAT), following a treatment similar to that in the European Union. Additionally, there is no dividend tax in Bosnia and Herzegovina, which can benefit crypto businesses that distribute profits to shareholders.

For individuals, crypto gains may be treated as capital gains or miscellaneous income depending on the frequency and purpose of trading activity. While the standard interpretation applies a 10% rate to declared income, interpretations may differ across entities. In BiH, crypto trading income may be treated as income from independent activity, which could require paying social contributions in addition to income tax.

Given the lack of explicit cryptocurrency tax legislation and the varying interpretations across entities, maintaining detailed transaction records and consulting with local tax professionals is essential for anyone engaging in cryptocurrency activities in Bosnia and Herzegovina.

Regulatory Oversight

The regulatory oversight of cryptocurrency activities in Bosnia and Herzegovina is fragmented across multiple authorities, reflecting the country’s decentralized governmental structure.

At the state level, the Financial-Intelligence Department (FID) applies the 2024 AML/CFT Law and is responsible for registering VASPs. This department oversees compliance with anti-money laundering requirements and monitors suspicious transaction reporting nationwide.

In Republika Srpska, the Securities Commission serves as the primary regulatory body for crypto-related activities. The Commission reviews VASP notifications, conducts fitness-and-propriety tests for key personnel, and supervises compliance with the Securities Market Law provisions regarding virtual currencies. Several entities have already registered as virtual currency service providers with the RS Securities Commission.

In the Federation of Bosnia and Herzegovina, the Securities Commission of FBiH has supervisory responsibilities under the AML law. However, a dedicated VASP registration framework equivalent to Republika Srpska’s has not yet been fully established. The Brčko District’s Directorate for Finances (Tax Administration) also has designated supervisory responsibilities for cryptocurrency exchanges operating within that jurisdiction.

The Central Bank of Bosnia and Herzegovina, while not directly regulating cryptocurrency activities, maintains its role in payment systems policy and has consistently issued circulars warning about the risks of digital currencies and prohibiting direct crypto-to-BAM conversions through regulated banks.

Business Environment

Banking Relationships

Banking relationships for cryptocurrency businesses in Bosnia and Herzegovina present significant challenges. Traditional banks in the country generally maintain a cautious stance toward crypto-related activities, largely due to the regulatory uncertainty and AML compliance concerns associated with digital assets.

The Association of Banks of Bosnia and Herzegovina has indicated that there is no unified stance among member banks regarding cryptocurrency business models. In the absence of clear legal guidelines, each bank independently evaluates risks and determines its policies regarding crypto-related clients. Banks rely on existing legislation, particularly the Law on Prevention of Money Laundering and Financing of Terrorist Activities, along with internal policies to manage associated risks.

Crypto-linked wire transfers are frequently blocked or subjected to enhanced scrutiny by domestic banks. This de-risking approach leaves many crypto businesses with limited options, sometimes requiring them to maintain accounts overseas or explore alternative payment solutions. Companies seeking to establish crypto operations in Bosnia and Herzegovina should anticipate banking challenges. They may need to work with specialized advisors to identify banking partners willing to serve the sector.

When opening corporate bank accounts for crypto-related activities, demonstrating strong AML/KYC compliance frameworks and transparent business models is essential. Some banks may be more receptive to licensed or registered entities that can demonstrate regulatory compliance and legitimate business purposes.

Licensing Requirements

Bosnia and Herzegovina does not have a unified, comprehensive crypto licensing regime at the state level. However, the 2024 AML/CFT Law has designated VASPs as obligated entities, establishing a foundation for regulatory compliance.

In Republika Srpska, a structured registration process exists for VASPs through the Securities Commission. Companies providing services related to virtual currencies—including exchange services, custody, wallet provision, and participation in token offerings—are required to notify the Commission and undergo registration. This process includes fitness-and-propriety assessments of key personnel and verification of AML/KYC compliance frameworks.

The services typically covered under VASP registration include custody and management of virtual currencies, operating trading platforms, exchange of virtual currencies for fiat currency, exchange between different virtual currencies, transfer and transmission of virtual currencies, and providing financial services related to token issuances.

To establish a crypto business in Bosnia and Herzegovina, companies must register a local legal entity (international business companies are not eligible), register with relevant government agencies including the Tax Service and Statistical Office, deposit initial capital into a local bank account, develop and implement comprehensive AML/KYC procedures in accordance with FATF recommendations, and appoint a designated AML manager responsible for transaction monitoring and compliance.

The minimum capital requirements are relatively modest compared to other jurisdictions: approximately €500 for a limited liability company (d.o.o.) or €25,000 for a joint-stock company (a.d.). There are no specific requirements for physical office space, though companies must maintain a registered address. The registration and licensing process typically takes between two tandfour months from initial application.

Innovation Support

Bosnia and Herzegovina is in the early stages of developing formal innovation support mechanisms for the cryptocurrency and blockchain sector. Unlike some EU member states, the country does not currently operate a regulatory sandbox specifically for fintech or crypto innovation.

However, the government has recognized the potential of the IT and cryptocurrency sectors for economic development. The country’s strategic position in the Balkans, combined with relatively low operational costs and a growing pool of IT talent, has attracted interest from crypto entrepreneurs seeking a European presence outside the more heavily regulated EU framework.

Legislative developments are ongoing. A proposed Federation FinTech Bill is under consideration, which would establish entity-wide VASP licensing that mirrors the Republika Srpska standards and incorporates the FATF Travel Rule. Policymakers are also exploring selective alignment with key MiCA (Markets in Crypto-Assets) provisions, such as white-paper disclosure requirements, while maintaining less demanding capital requirements to remain competitive.

The tech startup ecosystem in Bosnia and Herzegovina has shown particular interest in blockchain technology, with several companies developing applications in payment processing, supply chain management, and other blockchain-based solutions. The relatively flexible regulatory environment has created space for innovation, though it also poses challenges for investment security and long-term planning amid regulatory uncertainty.

Market Characteristics

Adoption Patterns

Cryptocurrency adoption in Bosnia and Herzegovina is growing, though from a relatively modest base. Estimates suggest that a small but increasing percentage of the population owns or has engaged with cryptocurrencies. The country has several Bitcoin ATMs operating in major cities, and the Adriatic Crypto Exchange (ACX) provides a domestic platform for trading multiple digital assets.

Remittances represent a significant potential use case for cryptocurrency in Bosnia and Herzegovina, given the substantial diaspora population sending money home from abroad. The high costs associated with traditional remittance channels have created interest in alternative transfer mechanisms, though widespread adoption of crypto for this purpose remains limited.

Consumer adoption is primarily driven by younger, tech-savvy populations and the IT community. Institutional adoption remains nascent, with most traditional financial institutions maintaining a cautious distance from cryptocurrency activities. Payment acceptance is not widespread, partly due to the CBBH’s position that cryptocurrencies cannot serve as legal payment methods in the country.

Industry Focus

Bosnia and Herzegovina has emerged as a cost-effective jurisdiction for crypto businesses seeking a European operational base without the full regulatory burden of EU membership. The country’s non-EU status means the Markets in Crypto-Assets Regulation (MiCA) does not directly apply, providing an alternative for companies seeking lighter regulatory requirements.

The types of crypto businesses establishing presence in Bosnia and Herzegovina include cryptocurrency exchanges and trading platforms, custody and wallet service providers, token issuance and ICO support services, and blockchain development and consulting firms.

The country’s competitive advantages include low corporate tax rates, no VAT on crypto transactions, minimal capital requirements for company formation, a growing IT workforce, and strategic geographic proximity to EU markets. These factors have positioned Bosnia and Herzegovina as a potential hub for crypto entrepreneurs, particularly those targeting the broader Balkan and Central European markets.

However, challenges remain, including banking access difficulties, fragmented regulatory oversight across entities, limited consumer protection frameworks, and the need for ongoing compliance investments to meet international AML standards.

Regulatory Evolution

Bosnia and Herzegovina’s cryptocurrency regulatory framework is actively evolving as the country works to balance innovation promotion with financial system integrity. The 2024 AML/CFT Law represented a significant step forward in providing a legal foundation for VASP oversight, bringing the country into greater alignment with international standards, particularly FATF recommendations.

The country faces external pressure to strengthen its regulatory framework. MONEYVAL (the Council of Europe’s anti-money laundering evaluation body) has conducted inspections and advised Bosnia and Herzegovina to harmonize virtual asset controls across all entities and strengthen enforcement capabilities. Failure to demonstrate practical progress could result in the country being added to the grey lists, with significant implications for its financial sector.

Looking ahead, several regulatory developments are anticipated. The Federation FinTech Bill could establish a more comprehensive VASP licensing framework in the Federation of BiH. Policymakers are considering selective adoption of key MiCA provisions while maintaining competitive advantages in areas like capital requirements. Enhanced enforcement capabilities and supervisory resources are expected as the regulatory framework matures.

As an EU candidate country, Bosnia and Herzegovina will eventually need to align its regulatory framework more closely with EU standards, including potentially implementing MiCA or equivalent legislation. However, during the pre-accession period, the country offers a unique window for crypto businesses to establish operations under a less demanding but increasingly formalized regulatory environment.

For Current Information

Central Bank of Bosnia and Herzegovina (CBBH)
https://www.cbbh.ba/?lang=en

Securities Commission of Republika Srpska
https://www.secrs.gov.ba/

Securities Commission of the Federation of Bosnia and Herzegovina
https://www.komvp.gov.ba/

Tax Administration of the Federation of Bosnia and Herzegovina
https://www.pufbih.ba/

Tax Administration of Republika Srpska
https://www.poreskaupravars.org/

Ministry of Finance and Treasury of Bosnia and Herzegovina
https://www.mft.gov.ba/