With 2022 being an election year for Bosnia, there is not a lot of market activity, according to BB Legal Partner Nenad Baros. There are crypto-related legislation updates on the horizon, however, and the market has settled down following the sale of Sberbank assets in the country to local banks.
“Every two years Bosnia & Herzegovina faces an election cycle,” Baros begins. “Two years ago we had local elections and in October of this year we will be voting on members of parliament.” As Baros explains, every time an election comes around the market experiences “a few months of little to no activity.”
On the plus side, Baros also reports that the market has settled down following bank runs in late February. “When the war in Ukraine started, there was a lot of uncertainty on the market which prompted people to quickly withdraw their assets. Further, the two Sberbank entities present in Republika Srpska and the Federation of BiH were taken under control of the banking agencies and quickly sold to local banks,” he says.
As Baros explains, the two Sberbank banks were sold to Nova Bank, in the Republic of Srpska, and to Prevent Group’s Asa Bank, in the Federation of BiH. “Although there was a lack of transparency in the purchasing process as well as the existence of a disputable legal basis for the expropriation of the rights of a foreign investor on the bank's shares, this transactions has, ultimately, led to a resurgence of market trust and stability,” Baros says. “The two banks were of a mid-market size, but by no means negligible – their sale calmed things down quite a bit.”
Finally, talking about proposed legislative updates, Baros points to the draft law for regulating cryptocurrencies. “There is a proposal being debated currently about introducing a regulatory framework for cryptocurrencies in Republika Srpska. Under this proposal, the Securities and Exchange Commission would have a critical role on the market, especially when it comes to preventing anti-money laundering and control over the participants in the cryptocurrency market,” Baros reports.
So far, Baros reports that the reactions have been split, with many being skeptical as to the ability of the Securities and Exchange Commission to efficiently monitor the market. “On the other hand, I – as many others – feel that having a framework in place is much, much better than having none. This may be a good first step, especially given the problems that cryptocurrency market participants have had, operating without a clear regulatory frame in Bosnia & Herzegovina,” he adds. “I hope that the proposed solution will take into account all the specifics of this market and will not introduce excessive formal barriers that could ultimately result in more harm than good. Anyway, it would be more than interesting to see how this will work in practice”, Baros says in conclusion.