project management) and is accepted as a medium of exchange, it will be considered to be both virtual currency and digital token – i.e., hybrid in nature.
The following rule may help in differentiation - if the digital property does not give any rights other than that it can be used for exchange, which is the case with e.g. bitcoin, then it is a virtual currency. If digital assets give other rights besides being usable for exchange, then they are (almost) certainly hybrid digital assets. If digital assets contain certain rights, but digital assets themselves are not intended for exchange, then it is probably a digital token.
The LDA provides that the CM Law will apply to the issuance of digital assets that have all the characteristics of a financial instrument, as well as to secondary trading and the provision of services connected to such digital assets. However, the CM Law
shall not apply to the issuance of digital assets that have all the characteristics of a financial instrument, nor to secondary trading and provision of services related to such digital assets, if all of the following conditions are met: 1) digital assets have no characteristics of the share; 2) digital assets are not exchangeable for shares; 3) the total value of digital assets issued by one issuer during a period of 12 months does not exceed the amount of EUR 3,000,000.
There is no regulation in relation to treatment of digital assets as investment product.
Presence of a duty to publish a prospectus bevor offering token/coins to investors
General rule is that the issuance of the digital assets is done based on the white paper approved by the local regulator. White paper is a prospectus-like document published when issuing digital assets which contains information on the issuer of digital assets, digital assets and risks associated with digital assets and which allows investors to make an informed investment decision. It is possible to issue the digital assets for which approval of the white paper is needed without such an approval if there is no advertising of such issuance.
Secondary trading in digital assets in Serbia is allowed, regardless of the approval of a white paper. However, there are restrictions in regard to advertisement of digital assets without an approved white paper, with exceptions being made in regard to those digital assets that have an approved subsequent white paper, that have a white paper approved in an EU member state, and those that are being traded on a large scale on the global market in line with EU AML/CFT rules.
Presence of AML/KYC requirements that are needed to be fulfilled regarding (i) the initial issuance of token/coins and (ii) any following transfer of token/coins to third parties
The white paper issued prior to the initial issuance of token/coins contains description of procedures for compliance with AML, including internal acts of the issuer for timely and comprehensive identification, assessment, measurement, monitoring, control and mitigation of risks of money laundering and terrorist financing that are related or may be related to the issuance of virtual currency and a description of the issuer's internal control mechanisms established to meet the obligations set out in the AML Law.
Providers of services connected with the digital assets are obligors of the AML Law. AML Law defines the actions and measures which the obligors should undertake for the prevention and detection of money laundering and terrorism financing before, during the course of, and following the execution of a transaction or establishment of a business relationship. Those actions and measures, which are expressly listed in the AML Law, include, among others, KYC procedure; record keeping, protection and storing of data from such records; developing the list of indicators for identifying persons and t