Montenegro

**Report: Retail Cryptocurrency Trading Status in Montenegro**

**Date:** April 12, 2025

**Prepared by:** Specialized Financial Regulatory Analyst

**Topic:** Retail_Trading_Status

**Description:** Assessment of the legal permissibility for individual citizens and residents in Montenegro to buy, sell, and hold cryptocurrencies, including details on the regulatory environment (e.g., KYC/AML requirements, official warnings).

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**1. Current Status:**

`Allowed-Regulated`

**2. Detailed Narrative Explanation:**

The status of retail cryptocurrency trading in Montenegro is best described as **Allowed-Regulated**, although the regulatory framework is still evolving and not yet comprehensive compared to more mature markets or the EU's upcoming MiCA framework.

Historically, Montenegro lacked specific legislation governing cryptocurrencies. The Central Bank of Montenegro (CBCG) issued warnings as early as November 2014, stating that cryptocurrencies are not legal tender and individuals engage with them at their own risk [2, 3]. Despite this lack of dedicated regulation and official caution, the buying, selling, and holding of cryptocurrencies by individuals have not been prohibited [3, 9]. Trading activities have been occurring, with residents using international exchanges [5] and cryptocurrencies reportedly being used for transactions like real estate purchases (typically involving conversion to Euros) [3, 5, 9].

A significant development occurred with the adoption of amendments to Montenegro's Law on Prevention of Money Laundering and Terrorist Financing (AML/CFT Law), which entered into force on March 20, 2025 [7, 16]. These amendments explicitly bring crypto-assets and Crypto Asset Service Providers (CASPs, also referred to as VASPs) under the scope of AML/CFT regulations [7, 10]. Key changes include:
*   **Definition of Crypto Assets:** The law now defines crypto assets as digital representations of value or rights transferable and storable electronically using DLT or similar technology [10].
*   **CASP Registration:** Providers of crypto-asset services are now required to register before operating in Montenegro. A public Register of Crypto-Asset Service Providers is to be established by the Capital Market Commission within nine months of the amendments' entry into force (i.e., by December 2025) [7, 10, 17].
*   **Enhanced Due Diligence:** The amendments strengthen client identification rules, potentially allowing video-electronic verification, and impose stricter requirements overall, aligning Montenegro closer to international standards (like those from DG FISMA and OECD) [7, 10].

This explicit inclusion of CASPs under AML/CFT law, mandating registration and adherence to specific compliance obligations, marks a shift from a largely unregulated environment to a regulated one, at least concerning anti-money laundering and terrorist financing prevention.

However, a comprehensive regulatory framework specifically governing the broader aspects of crypto assets (beyond AML/CFT), such as licensing requirements (distinct from AML registration), consumer protection standards, market conduct rules, and specific prudential requirements for CASPs, is still under development. A working group, coordinated by the CBCG and including representatives from the Ministry of Finance and the Capital Market Authority, was established in November 2022 to draft a dedicated Law on Crypto Assets, with technical assistance from the World Bank [15]. The Central Bank is also working on national standards harmonized with the EU's Markets in Crypto-Assets (MiCA) regulation, reflecting Montenegro's EU accession aspirations [5]. The Central Bank also offers a regulatory sandbox for crypto companies [8, 11].

Regarding taxation, the situation is also evolving. While some sources indicate a lack of specific crypto tax rules [12, 9], others suggest that existing tax laws are applied. Gains from selling cryptocurrencies are generally considered subject to capital gains tax (reported rates vary slightly but often cited around 9-15% for individuals), and income from activities like mining is treated as business income subject to corporate tax (9%) [6, 12]. VAT does not currently apply to crypto transactions, but this could change [12]. Taxpayers are expected to declare crypto-related income [12].

In summary, individuals in Montenegro are permitted to trade and hold cryptocurrencies. While a full, dedicated crypto-asset law is still pending, the recent implementation of mandatory AML/CFT registration and compliance obligations for service providers signifies a move into a regulated space, justifying the status "Allowed-Regulated". The regulatory environment is expected to continue evolving, particularly as the dedicated crypto law progresses and Montenegro aligns further with EU standards like MiCA.

**3. Specific Excerpts/Summaries from Sources:**

*   **AML Regulation Enacted:** "Montenegro has adopted amendments to its Law on Prevention of Money Laundering and Terrorist Financing, effective 20 March 2025, introducing stricter regulations for crypto assets... Crypto asset service providers must now register before operating..." [7] "The Parliament of Montenegro has adopted amendments to its Anti Money Laundering law on 28 February 2025, to align with DG FISMA and OECD." [10]
*   **Registration Requirement:** "The Capital Market Commission will manage an online register of all entities offering crypto-related services. This register will be publicly accessible... The establishment of the register is set for completion within nine months of the amendments' entry into force." [10] (See also Article 131a of the amended law [17])
*   **Lack of Comprehensive Law & Ongoing Work:** "Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear." [2] "To regulate the crypto assets area... the [Financial Stability] Council today formed a working group tasked with preparing the Working Draft of the Law on Crypto Assets. The CBCG will coordinate the work..." (Nov 2022) [15]. "The Finance Ministry cautioned that it was unable to give any time