Crypto-funded debit card in Bosnia and Herzegovina

Bosnia and Herzegovina now has a state-level AML/CFT framework that expressly covers virtual asset/virtual currency service providers, and Republika Srpska has a dedicated registration/notification regime for virtual currency service providers administered by the RS Securities Commission. While there is still no MiCA-style, fully harmonized crypto-asset licensing law at the state level, RS does operate a specific regulatory and registration regime for crypto businesses, so it is no longer correct to say that BiH operates under ‘no specific licensing regime’ or lacks any mandated authority for crypto businesses.

For virtual asset service providers, AML/CTF registration is no longer best described as an informal or merely ‘implied’ reporting registration. In line with FATF standards and recent reforms (including Australia’s Tranche 2 and comparable EU/Ireland approaches), VASPs are explicitly required to register with the competent AML/CTF authority (e.g., AUSTRAC or the Central Bank) before providing designated services, and must comply with a comprehensive set of ongoing AML/CTF obligations. While this registration is technically for AML/CTF purposes rather than a full prudential or conduct-of-business licence, it is a formal, mandatory regime with significant, licence-like compliance and enforcement requirements—not simply an implied reporting status.

No specific "crypto custody license" exists. Unlike some EU countries with dedicated VASP (Virtual Asset Service Provider) licensing regimes that explicitly cover custody, BiH has not yet introduced such a license.

EU Alignment and MiCA: This is the most significant pending development. Bosnia and Herzegovina is an EU candidate country. As such, it is expected to gradually align its legislation with the EU acquis communautaire. The European Union's Markets in Crypto-Assets (MiCA) Regulation (Regulation (EU) 2023/1114) entered into force in June 2023, with most provisions becoming applicable from December 2024 and June 2025.

Timeline: The process of drafting, adopting, and implementing such comprehensive legislation would likely take several years after a formal commitment to MiCA alignment is made.

Zakon o sprečavanju pranja novca i finansiranja terorističkih aktivnosti (Law on Prevention of Money Laundering and Financing of Terrorist Activities) – Official Gazette of BiH, No. 13/2024.

Crucial Amendment: The latest significant amendments, particularly those published in Official Gazette of BiH, No. 13/20 (Law on Amendments to the Law on Prevention of Money Laundering and Financing of Terrorism), explicitly brought Virtual Asset Service Providers (VASPs) under the scope of obliged entities. This amendment defined virtual assets and established obligations for entities dealing with them.

Exchange between virtual assets and fiat currencies.

Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.

Identification and Verification of the Customer:

Identifying the customer (and any person acting on behalf of the customer) and verifying their identity using reliable, independent source documents, data, or information.

Identification of the Beneficial Owner:

Purpose and Intended Nature of the Business Relationship:

Conducting ongoing monitoring of the business relationship and transactions undertaken throughout the course of the relationship to ensure that transactions are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Enhanced CDD (EDD) is required only for specific high-risk activities in Bosnia & Herzegovina, not universally for all higher‑risk situations.

No specific rules for digital assets. Given the absence of a dedicated custody framework, there are no specific legal mandates requiring the segregation of client digital assets from the custodian's proprietary assets.

General Fiduciary Principles (by analogy): While not legally binding for crypto, general principles of good corporate governance and financial trust would suggest that responsible custodians should segregate assets. However, this is currently a best practice rather than a regulatory requirement in BiH for digital assets.

No specific requirements. There are no explicit regulatory requirements for digital asset custodians in BiH to hold specific insurance or bonding to cover potential losses from hacks, operational failures, or other risks.

No specific mandates. BiH law does not currently mandate the use of cold storage (offline storage) for digital assets under custody. Responsible custodians would typically employ a combination of cold and hot storage for security reasons, but this is an operational choice rather than a regulatory obligation.

No specific definition. BiH law does not currently define what constitutes a "qualified custodian" for digital assets. Without a dedicated custody framework, such definitions are absent.

Under general capital gains principles in BiH, exchanging cryptocurrency for fiat currency (BAM, EUR, USD) constitutes a disposal of an asset, potentially triggering a taxable event. However, no specific BiH cryptocurrency tax legislation or official guidance exists to confirm this treatment.

Using cryptocurrency to purchase goods or services constitutes a disposal of an asset under general BiH tax principles. The fair market value of goods/services received is the proceeds. No specific BiH guidance exists for cryptocurrency transactions.

Entity Targeted: An organized international criminal group. Violation Type: International drug trafficking, organized crime, and money laundering through cryptocurrencies. The use of encrypted applications (Sky ECC and Anom) and cryptocurrencies was central to their operations for communication and financial transactions.

Multiple arrests were made across BiH (and internationally in coordinated actions).

The case highlights the growing use of cryptocurrencies by organized crime groups in BiH and the region for illicit financial flows, prompting law enforcement to adapt.