Croatia

**Report on the Status of Retail Cryptocurrency Trading in Croatia**

**Date:** April 12, 2025

**Topic:** Retail_Trading_Status

**Description:** Assessment of the legal permissibility for individual citizens and residents in Croatia to buy, sell, and hold cryptocurrencies, detailing the regulatory environment, including KYC/AML requirements and official warnings.

**1. Current Status:** `Allowed-Regulated`

**2. Detailed Narrative Explanation:**

Retail trading of cryptocurrencies (referred to as virtual currencies or virtual assets in earlier Croatian legislation, and now crypto-assets under MiCA) is permitted in Croatia but is subject to a developing regulatory framework, primarily focused on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) requirements, and now increasingly governed by the EU's Markets in Crypto-Assets (MiCA) Regulation.

Historically, Croatia did not have specific legislation comprehensively regulating cryptocurrencies beyond AML rules. The Croatian National Bank (HNB) and the Croatian Financial Services Supervisory Agency (HANFA) have consistently stated that cryptocurrencies are not legal tender, electronic money, or financial instruments under traditional definitions. They have also issued warnings about the high risks associated with crypto investments, including volatility, potential for fraud, and lack of deposit insurance protection.

The key turning point in regulation began with the transposition of the EU's 5th Anti-Money Laundering Directive (AMLD5) into Croatian law, specifically amending the Act on the Prevention of Money Laundering and Financing of Terrorism (AML Act). This brought certain crypto-asset service providers (CASPs), namely those engaged in exchange services between virtual currencies and fiat currencies, and custodian wallet providers, under AML/CTF supervision by HANFA. These providers are required to register with HANFA and implement customer due diligence (KYC) measures, risk assessments, and transaction monitoring.

The most significant regulatory development is the application of the EU's MiCA Regulation, which became applicable across the EU, including Croatia, starting December 30, 2024 (with full application of all provisions by mid-2025). Croatia proactively adopted a national MiCA Implementation Act, which entered into force in July 2024. This act designates HANFA and HNB as the competent authorities for supervising crypto-asset activities under MiCA.
*   **HANFA** is responsible for supervising the issuance of crypto-assets (other than asset-referenced tokens (ARTs) and e-money tokens (EMTs)), the operations of CASPs, and crypto-asset trading.
*   **HNB** is responsible for supervising the issuance of ARTs and EMTs.

Under MiCA, Croatian companies wishing to provide crypto-asset services (like exchanges, custody, etc.) must obtain prior authorization from HANFA. Entities already registered with HANFA under the previous AML framework (as Virtual Asset Service Providers - VASPs) have a transitional period until July 1, 2026, to obtain a full MiCA license, but can continue operating under AML supervision until then.

For retail investors, this means:
*   They are legally allowed to buy, sell, and hold cryptocurrencies.
*   They should use CASPs that are either authorized under MiCA or are existing VASPs registered with HANFA operating within the transitional period. HANFA maintains public registers for these entities.
*   Trading cryptocurrencies is considered a financial transaction for tax purposes. Capital gains derived from selling cryptocurrencies held for less than two years are subject to personal income tax (currently 12%, potentially plus local surcharges). Gains from cryptocurrencies held for more than two years are tax-exempt. Proper record-keeping is required.
*   Regulators continue to warn consumers about the risks and advise them only to invest what they can afford to lose and to deal only with regulated entities.

The implementation of MiCA signifies a shift from a primarily AML-focused regulation to a comprehensive framework covering issuance, trading, and service provision, aiming for greater investor protection and market integrity.

**3. Specific Relevant Text Excerpts:**

*   **On Legality & Definition (Pre-MiCA AML Act):** "Cryptocurrencies (virtual currencies) are only regulated by Croatian Act on the Prevention of Money Laundering and Financing of Terrorism (AML Act)... AML Act describes virtual currencies as a subtype of virtual assets that represents a digital representation of value that is not issued by nor guaranteed by a central bank or public authority... but is accepted by individuals or legal entities as a means of exchange..." (Source: Multilaw)
*   **On AML Regulation:** "Under AML regulation, entities providing certain services in relation to virtual assets are required to carry out KYC proceedings and apply other relevant provisions of the Croatian AML Act. Every company seated in Croatia that intends to perform respective crypto services is obliged to register with the Croatian Financial Services Supervisory Agency (HANFA), which supervises the implementation of AML obligations." (Source: CMS Law)
*   **On MiCA Implementation:** "On 30 December 2024, Regulation (EU) 2023/1114, better known as the Markets in Crypto-Assets Regulation (also known as MiCA), became applicable in the Republic of Croatia. For the first time, the Regulation introduces uniform rules for business as well as supervision of the issuance of crypto-assets, trading in crypto-assets and the provision of crypto-asset services throughout the European Union." (Source: HANFA)
*   **On Competent Authorities under MiCA:** "In the Republic of Croatia, there are two authorities responsible for the supervision of crypto-assets: Croatian National Bank, responsible for: controlling the issuance of asset-referenced tokens (ARTs); controlling the issuance of electronic money tokens (EMTs). Croatian Financial Services Supervisory Agency, responsible for: controlling the issuance of tokens other than ARTs or EMTs; supervising the operations of entities providing crypto-services; supervising the crypto-asset trade." (Source: HANFA)
*   **On Licensing Requirements (Post-MiCA):** "A Croatian company wishing to provide crypto-services must obtain prior approval from Hanfa. Such companies are listed in Hanfa's registers." (Source: HANFA)
*   **On Transitional Period for Existing Providers:** "Some Croatian companies already provide crypto-services to clients and are currently supervised by Hanfa only with respect to the prevention of money laundering and terrorist financing. They will also need to obtain Hanfa's authorisation in order to continue providing such services. They must do so until 1 July 2026 at the latest... Such entities are called virtual asset service providers (VASPs) and they are listed in THIS register." (Source: HANFA, CMS Law)
*   **On Taxation:** "The Croatian Income Tax Act (ZPDOH) classifies cryptocurrency trading as capital income from capital gains (Article 67 of ZPDOH). The law imposes a 12% tax rate on this type of income... Long-term investors benefit from a notable tax exemption under the Croatian Income Tax Act: they avoid capital gains tax if they hold cryptocurrency for more than two years (Article 67, Paragraph 8)." (Source: Confida)
*   **On Regulatory Warnings:** "When asked about the cryptocurrency market, Boris Vujčić, the