The Outlooker 08

North Macedonia is the sole EU country that has banned crypto transactions but not mining - will digital currencies prevail?

The Promontory

North Macedonia is currently the only European country to prohibit cryptocurrencies since 2016. The National Bank of Macedonia issued a statement announcing that cryptocurrency-related activities are strictly banned. The governor of the National Bank of Macedonia also stated that Bitcoin trading and use is strictly illegal. However, the use of Bitcoin is not currently banned, and there are no known restrictions on Bitcoin businesses in North Macedonia. The use of virtual assets as representations of value will be governed completely by the law. The Macedonian authorities have also concluded that mining for Bitcoin isn't considered a crime. As a result, an uptrend of Bitcoin mining in North Macedonia was observed. The Ministry of Local Self-Government also released a new program for sustainable local development and decentralization. Despite the government’s disinclination towards crypto, they're keen on improving decentralization reform in the country.

North Macedonia's stance on cryptocurrency

In 2016, the National Bank of Macedonia issued a statement warning citizens about the potential risks of cryptocurrencies. Since international payments are conducted by Macedonian banks, Bitcoin trading is illegal and won't be easily regulated. The Financial Crimes Enforcement Network (FinCEN) dictates that crypto miners who facilitate digital transactions are subject to the laws that govern it.

At present, the Ministry of Finance is working together with the Financial Intelligence Office, regulators, and supervisors regarding the usage of virtual assets. They plan to implement solutions in the new "Monday Laundering and Financing of Terrorism" act. They also mentioned the importance of cryptocurrencies to be governed by the law - to prevent money laundering and terrorist attacks. The political commitment to decentralization is present in North Macedonia, but more clarity regarding laws and a proper framework is needed.

Authorities are cracking down on Bitcoin mining operations

A police raid was conducted in 2021 in Skopje's central GTC shopping mall, where a group reportedly set up Bitcoin mining rigs and used an illegal link to power their operation.

Bajram family GTC shopping mall cryptocurrency crypto
The Bajram family was accused of illegal bitcoin mining. 

The final report concluded that the storage space was rented out by a company owned by the Bajram family. Their sons were former members of parliament, and the family also had control over the GTC shopping mall. Ultimately, the Interior of Ministry decided that the family was not guilty, and that the operation was perfectly legal since the electricity usage was not conducted illegally. The same warehouse was investigated months after the operation and deemed no risk to the economy.

The rising trend of Bitcoin mining in North Macedonia

In the past few years, there's been an upward trend in Bitcoin mining in North Macedonia. The low cost of electricity has attracted Bitcoin miners as well as its proximity to major Bitcoin mining pools. This underscores the developing interest in Bitcoin mining, and the role that electricity plays in determining profitability. In North Macedonia, miners are reaping the benefits of the lowest electricity rates in Europe.

The unemployment rate is quite high, with nearly 27% of citizens without work. This is primarily due to the relatively young population, with a median age of 31 years. Nonetheless, the economy is improving slowly with a GDP growth rate of 4% in 2017 - due to Bitcoin mining. This year alone, North Macedonia has reached $1.2 million in Bitcoin transactions thanks to LocalBitcoins, a well-known P2P trading platform. North Macedonia will most likely become a hub for Bitcoin mining if the trend continues, and the government is taking small and steady strides towards that direction.

The Intel

North Macedonia has prohibited the use of cryptocurrencies since 2016. The governor of the National Bank of Macedonia has also banned the act of trading. There’s no current law against Bitcoin mining, hence the upward trend in the past few years. North Macedonia boasts low electricity prices which makes it an attractive destination for crypto miners. The Ministry of Local Self-Government recently released a new program directed towards decentralization and sustainable local development. Citizens are turning towards crypto despite prohibition, and it’s only a matter of time before North Macedonia joins Europe in adopting cryptocurrencies.

DISCLOSURE:

‌‌‌‌This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. Charts, graphs, and references to any digital assets are for informational and illustrative purposes only.

Finblox Blog is associated with Finblox - a next-generation crypto ecosystem where you can buy and earn amazing rewards on your digital assets.

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