CRYPTOCURRENCIES AS (I)LEGAL TENDER IN NORTH MACEDONIA AN THE EU

Abstract

In recent years, cryptocurrencies have increasingly entered the mainstream as instruments of
payment and even to a larger extent as investments. While it was difficult and technically
challenging to invest in cryptocurrencies in their early days, today it is as simple as or often even
simpler than investing in regular stocks, bonds or any number of financial instruments. The
promises of cryptocurrencies are that they will allow for simple, easy, cheap, fast, secure and
mostly anonymous transactions. While still no cryptocurrency has reached those targets to such an
extent that, it could present serious competition to regular means of payment, a vast number of
experts across the world, work to solve those issues and improve the quality of cryptocurrencies.
However, the steep rise of cryptocurrency brought also a multitude of issues with it.
Cryptocurrencies have been used for their quasi anonymity (pseudonymity) as means of payment
of criminal organizations and for black market transactions. Furthermore, the international and
decentralized nature of cryptocurrency enabled tax avoidance and evasion. An even worse
occurrence was the use of cryptocurrency trading platforms for money laundering purposes. Most
cryptocurrencies have proven to be unstable, some even up to the extent where their value was
entirely artificially created through so called “pump and dump” schemes.
In conclusion, cryptocurrencies show a lot of potential, but also present a serious risk for national
fiscal and monetary interests, as well as consumer rights. Some countries addressed those issues
by outright banning cryptocurrencies, while other preferred to regulate, monitor and tax them.
While North Macedonia chose the former approach, the EU took a strong regulatory approach towards cryptocurrency in the 5th Anti-money laundering Directive. The directive regulates
providers engaged in exchange services between virtual currencies and fiat currencies as well as
custodian wallet providers, which now must meet the same requirements as financial institutions.
This paper compares the European approach with the stance of the Republic of North Macedonia.
It attempts to highlights the advantages and risks of the respective approaches by addressing the
regulatory impact of the existing legal frameworks on all stakeholders.