Slovenia’s Financial Watchdog Warns About Cryptocurrency Risks

The Financial Stability Board (FSB), an affiliate of Slovenia’s central bank and the nation’s financial watchdog, issued a statement yesterday informing people that cryptocurrencies are not regulated and are not guaranteed by the central bank or by any other governmental institution.

The statement also declared that ICO’s are not regulated and cautioned investors to only invest “in the amount that would not leave them too exposed”. According to Reuters, the FSB announcement was in line with recent interest from the public in cryptocurrencies, seeing them as a viable investment opportunity.

“Investors in virtual currencies … have to take into consideration whether risks are in line with their personal preferences and investment goals” – Financial Stability Board

Cryptocurrencies in Slovenia

A previous statement regarding the legality of bitcoin was made by the Slovenian Ministry of Finance in December 2013, stating that that “Bitcoin is neither a currency nor an asset”. It also reported that, although there would be no taxes on profits from exchanges, Bitcoin mining and businesses selling goods/services in Bitcoin should be subjected to taxing. However, how bitcoin profits should be included in the annual income statement was unclear and so cryptocurrencies remained mostly unregulated in the country.

Bitcoin is very popular in Slovenia, being known in the FinTech space as a Bitcoin powerhouse. It is one of the countries (fourth) with the most “Bitcoin” google search queries in the world and is home to at least 9 Bitcoin ATMs. Peter Trcek, CEO of Slovenian Bitcoin service provider Bitnik, declared:

“Bitcoin is much better known in Slovenia compared to most other Countries. Almost everybody has heard of it. While not all sentiments are positive, there have been fewer negative reactions, even amongst media and financial institutions, lately.”

Also, most of the development and management of Bitstamp, one the largest cryptocurrency exchanges in the world, is located in Slovenia. Having recently updated its main anti-money laundering law (AML), considering cryptocurrency exchanges as financial institutions, and being part of SEPA (Single Euro Payments Area), makes Slovenia a cryptocurrency haven.

Cryptos under fire

As cryptocurrencies and ICOs have registered an enormous growth this year, nations and government all over the world are looking for ways to either regulate or ban the use of cryptocurrencies. Recent events in the cryptosphere have seen China and South Korea ban ICOs. The US and Canada took a different approach: instead of banning ICOs, national financial institutions started considering ICOs as securities and declared their intention to regulate them as such and it seems the Canadian Securities Administration (CSA) was honest in their intention, having already launched its first legally regulated ICO, Impak Coin.

Another recent trend is countries discussing the possibility of state-managed cryptocurrencies. Dubai was a queen of the idea and now Estonia, a neighboring country to Slovenia, became the first European country to openly discuss the likelihood of adopting a cryptocurrency controlled by the government, estcoin. Although the proposal was criticized by Mario Draghi, European Central Bank President and the idea of state-managed cryptocurrency goes against the principle of blockchain and decentralized technology, it seems Europe is now the most legally favorable region for cryptocurrencies.