Moreover, the country has a well-developed financial industry. Montenegro is set to join the EU by 2025. This is terrific news for those interested in the financial world because it would mean Montenegrin licenses will have passporting rights across the EU.

And one of those financial services you can get in Montenegro is a crypto service, including crypto exchange and wallets. The cryptocurrency market has grown enormously in the last few years and it's a legit business that many jurisdictions are eager to welcome. And Montenegro is one of them.

This is especially important as Europe is a continent filled with statist regulations that are sometimes outright aggressive towards crypto and try to apply its prohibitive tax rates to these assets.

Montenegro has applied an interesting approach towards crypto businesses: it has a relaxed approach with no specific regulations licenses other than the regular financial licenses in the country.

In fact, cryptocurrencies have become a popular payment option in the real estate market as many touristic properties have been paid in cryptocurrencies in legal processes that were overseen by authorities of the country.

To sum up, why should Montenegro be the destination of your crypto business?

• One of the best (if not the best) tax systems in Europe, with a 9% corporate tax rate.
• A friendly regulatory environment where crypto businesses don't have special regulations, provisions, or fees.
• A terrific banking system in a non-CRS jurisdiction, which means that your income kept in Montenegrin banks won't be automatically reported to foreign authorities.
• You can take advantage of the regulatory sandbox. That is an innovative regime that allows you to temporarily test your technologies and start your fintech business in Montenegro before licensing, and then pay for the licensing fees and process with the income you've made with your company.
• Montenegro is generally considered the freest economy in the Balkans.
• Montenegro is an EU candidate that'll likely join the Union in 2025. That means all financial licenses will likely have passporting rights from that point.
• Montenegro uses the Euro and it has very liberal currency controls. You can use other currencies for transactions, including crypto. The capital operations in Montenegro, including transfers of property from and to Montenegro, can be performed with the utmost freedom.
• The country is both legally and culturally friendly to expats. Foreign investors and non-residents have equal economic rights with locals. Moreover, Montenegro is a cosmopolitan society that is incredibly open to foreigners.
• The cost of living is very low, especially considering that it offers the same comfort as any other European country

The regulatory sandbox

Crypto is a new thing for all countries, and not all are approaching it in a pro-business way; others are just ignoring it, while others just don't know what to do with it. The Balkans usually had a tough stance against crypto, but Montenegro was one of the first countries in the region to take a step forward and change that approach.

Undoubtedly, this is a new thing for the country. Nevertheless, the Montenegrin Security Exchange Commission supported the crypto trend and created a Regulatory Sandbox.

The regulatory sandbox seeks to provide a more efficient way for innovative firms to interact with regulators.

This includes a pilot for firms wishing to test innovative products, services, or business models. The FinTech Sandbox is a unified platform to foster and connect the FinTech ecosystem, including stakeholders, FinTech startups, financial institutions, regulators, service providers, mentors, and investors.

The best benefit of the sandbox is that, for specific products or services, allows sandbox participants to operate in the capital and financial market without a license for a test period and to get legal access to banking, government services, and financial engineering services.

That means that, for example, you can start operating a crypto wallet from Montenegro before receiving your license to test your technology, and with the income you start making, pay for the license and professional fees to receive it.

Financial licenses are usually tough to receive and require serious levels of investment. That means that many startups have a hard time finding the kind of financing they need to apply for the license, and sometimes, they can be left out for mere technicalities. To foster a positive innovation and investment environment, Montenegro created the sandbox, meaning you can earn these funds by working in the sandbox without a license. During this time, the regulator will have the opportunity to study your business better and decide on further licensing.

That means the sandbox isn't exclusively for crypto companies, but for all kinds of fintech initiatives. 

How can a crypto company operate in Montenegro?

As we've said, the licensing and operational environment in Montenegro for crypto companies are flexible. However, as the country is pointing towards EU membership, certain regulations still apply. That means that some practices are keenly recommended when starting a crypto business that wishes to operate within the regulatory sandbox:

• The first is obviously registering a company in Montenegro with a physical office. There are no specific personnel or space requirements, but it is expected that you actually have an operating company and not just a shelf company. This is a simple process that can be completed in less than a week, and the government fees to do so are less than €100. It has eight steps:

1. Certify the articles of association with a public notary.
2. Pay the registration and publication fee.
3. Request the registration and customs certificate and the taxpayer and VAT number.
4. Obtain the company seal.
5. Open a corporate bank account.
6. Register at the social security.
7. Pay the administrative municipal fee.
8. Notify the inspection authority about the commencement of the economic activities.

• After this process, the company must draft an AML policy in full compliance with European standards, which means you should have an anti-money laundering and terrorist financing rules, internal control rules, and technical tools to track suspicious transactions.
• Hand in hand with the AML policy is the establishment of KYC requirements to identify data disclosure of the customers and the data protection policy for the information the customers will disclose.

Now, we can speak about the sandbox itself. When can a company apply for the sandbox? The rules on the regulatory sandbox established by the Capital Market Authority say the following:

"Capital Market Authority's regulatory sandbox serves to simplify the implementation of financial innovation in the capital market, particularly if the regulation of any activity which relies on financial innovation is insufficient or unclear. A regulatory sandbox aims to enable the Authority to identify in advance the possible effects of financial innovation to customers and financial system, potential risks, identify possible disadvantages with respect to regulation of the capital market and eliminate or reduce, within its competence, these regulatory disadvantages and any possible negative effects of financial innovation."

In other words, to foster financial innovation, Montenegro is taking a bold approach. Instead of saying, "well, we don't have regulations on your technology, so you cannot use it" (which is what many countries are unfortunately doing with crypto); it is actually doing the exact opposite.

When the current Montenegrin laws don't clearly regulate a fintech initiative, it can apply for the sandbox and operate in it while it passes through the regulatory process. Thus, it is directly aimed at fast-tracking regulatory processes and creating a more attractive environment for entrepreneurs. Crypto is the textbook example of this situation, as there are no present regulations in Montenegro regarding blockchain technology and cryptocurrencies.

To be able to take advantage of the regulatory sandbox, a company must meet the following criteria:

• Its technology is new in the Montenegrin market.
• If applied, the financial innovation will create identifiable benefits to customers such as more practical and safer financial services.
• The financial innovation is ready to be tested in a real business environment.
• The technology requires the Capital Markets Authority to consult with capital market participants, apply the principle of proportionality and is not forbidden or punishable under the Montenegrin law.
• The financial innovation holder is a Montenegrin legal person.

Applying for the regulatory sandbox

To be able to access the regulatory sandbox, you must submit an application to the Capital Market Authority, that must comply with the following criteria:

• It must contain personal information (ID, proof of address, CV, police clearance) of managers and major beneficiaries.
• No participant or manager without a clean criminal record can hold more than 20% of the voting rights or interests of the company.
• Detailed disclosure of financial innovations to be tested and the cooperation with other financial system participants (other companies, organizations, etc.) and expected results.
• Determine the timeframe of the testing period (it can't be longer than six months).
• Describe an expected group of clients and methods to target and inform them about the services.
• Describe the risks associated with the financial innovation to be tested and measures to limit the scope of activities and reduce the risks.
• Indicate the actions the company will take after exiting the sandbox if the Authority decides to provide further licensing.

The Authority will decide about the admission of the company to the sandbox within three months of submission of the application and testing plan. A company cannot operate within the sandbox for more than six months, but the period can be prolonged if a reasoned extension application is submitted with the Authority.

Who are we, and what can we do for you?

In Mundo, our core value is freedom. That's why we have a long history of working with our partners and helping investors and family offices all over the world to get valuable information. Thus, they can enhance their freedom to invest, work, live, and protect their assets to ensure a future for their families.

We believe in freedom, and that also means freedom from the state. Cryptocurrencies are one way to increase such freedom because they are decentralized, depoliticized, and deregularized currencies, meaning they don't come from the hands of the Big Brother Central Bank.

And many countries haven't understood how to handle crypto. Some have outright rejected it, others have imposed crazy regulations, and others have embraced it.

Europe has all kinds of experiences. For example, countries like Malta have decided to regulate technology itself, which is odd for some analysts. Others, such as Estonia, have pursued an independent policy towards virtual currencies and creating e-Residency programs.

Montenegro is closer to that second group. It has taken the exact same approach of the US Securities and Exchange Commission, which basically said that if something is not forbidden by law, doesn't cause any harm (in fact, helps a lot), why regulate it? It's legal as long as it operates within the already-existing laws. Montenegro has embraced that same laissez-faire approach.

And Montenegro has a mostly untapped financial potential. It has both the right tax policy and pro-business attitude to become another European financial small giant like Cyprus and Malta. Its potential EU membership can have a positive impact on the investment climate and the development of the regional segment of the capital market. Montenegro can also become a driver of the development of the financial market of the Western Balkans as a whole.

Montenegro has infinite potential as a crypto destination. It has everything to become a top financial destination in the next few years and especially a top fintech and crypto hub.

Also, it is one of the best jurisdictions to establish your crypto company. It fosters an attractive and deregulated environment for fintech entrepreneurs with incredible ideas. 

Disclaimer: The information contained in this article is for informational purposes only and does not constitute financial advice or recommendations. Investing in financial products or cryptocurrencies involves risks, and you should be aware of the potential risks involved before investing. The content on this website is not intended to be a solicitation or offer to buy or sell any financial products or services. The information provided does not take into account your specific investment objectives, financial situation, or needs, and should not be relied upon as a substitute for professional financial advice. You should seek independent advice from a financial advisor or other professionals before making any investment decisions. Please be aware that the legal status of cryptocurrencies and other financial products may vary in different jurisdictions and may be subject to regulation. It is your responsibility to ensure compliance with any relevant laws and regulations governing the sale and marketing of financial products and services in your jurisdiction.