Serbia is located between two distinctly different geographical regions - those of the Europe and the Middle East. Consequently, country's historical development has been dramatically affected by major political and military events in both of those Worlds.
Serbian Kingdom had became prominent in Europe in early 13th century but existed for a relatively short period of time (for about 130 years). In a mid-15th century Serbia lost its sovereignty to the Ottoman Empire and stayed within its realm until late 19th century when it obtained de-jure independence (recognized by the Congress of Berlin in 1878) after Russian victories over Turks army.
It was the first country to enter the World War One after Austria-Hungry had accused Serbia in masterminding the Sarajevo episode. During that war Serbia lost more than 20% of its population.
After the Second World War Serbia became one of the most prominent republics within the newly formed socialist Yugoslavia which also included Bosnia and Herzegovina, Croatia, Macedonia, Montenegro and Slovenia. From the early 1980th Yugoslavia's regions had received an unprecedented level of political and economic independence. By the end of 1990th most of former Yugoslav commonwealth entities became independent states.
That dramatic breakup had lead to regional wars and it became the major point of contentions in Europe at the end of 20th century resulting in current political tensions existing between Russia and the EU. In 2008 the province of Kosovo became the latest region which was separated from Serbia. However, Kosovo's new political status remains a divisive issue within the international community.
Economically Serbia heavily relies on its agriculture sector. Serbia is world's second producer of plums and raspberries. Serbia's industrial sector was heavily affected by UN sanctions and NATO bombing in 1990th and now is in a process of a very slow recovery.
For most part of XX century Serbia was the heartland of centralized Yugoslav economy closely managed and controlled from Belgrade and characterized by corruption and over-bureaucratization. Long after dissolution of the Socialist State Serb telecommunications sector had stayed under the auspice of one government led corporation. As a result, although Internet penetration in this country has reached Western European norm of around 60%, mobile usage is still relatively low.
Additionally, outdated commercial laws as well as excessive tax levies on SME have negatively affected local investment climate, which led to shortage of seed and VC financing in Serbia. Country's manufacturing sector competitive advantages are undermined by the lack of innovations. However, Serbian big corporations are slow to adapt new products and services developed by high-tech founders.
On top of that, local startups are faced by shortage of qualified personnel as many talented Serbians continue to leave this country for better opportunities in EU. In past several years, Serbian government had sponsored several projects aimed at fostering the grow of country's startups ecosystem. Few of those initiatives have resulted in significant breakthroughs.
At the same time, developed fixed Internet infrastructure, low costs and absence of significant competitive pressure provide high-tech entrepreneurs with multiple opportunities on B2C markets, including FinTech, e-commerce, EduTech and entertainment.
The National Bank of Serbia (NBS) has became one of the first Eastern European national currencies gate-keepers, which revealed its official position on crypto-currencies as early as in October 2014. In that straightforward document NBS declared that Bitcoin cannot be considered to be a legal tender in Serbia, which precludes all local banks and licensed dealers from buying \ selling crypto. It also referred its fearful readers to the ECB's 2012 "Warning to consumers on virtual currencies", which contains one of the basic primeval collections of anti-Bitcoin phobias.
After almost two years of keeping its anti-crypto plans hidden from the general public, NBC addressed this controversial topic again in its April 4, 2016 letter eloquently named "Bitcoin Will Not Replace Euro or Any Other Currency". This highly suggestive title had been chosen by NBC to save an unsuspected populace from the folly of giving to Luxembourgian regulators too much of credit for their decision to grant a license to a country's first Bitcoin exchange.
This time, however, the literary style of this official piece was less aggressive and more thoughtful than that of its predecessor. The authors humbly reduced themselves to a noble task to warn Serbians that they must strictly adhere to dinar (which had been already devalued for more than 300% since 2008) as the only mean of exchange allowed in the country. This short official letter also out-lawed all future attempts, which may be entertained by local residents, to obtain crypto on the aforementioned new Luxembourgian exchange.
As to the existing legal environment, which concerns the Serbian crypto-community, it's still full of contradictions and uncertainties. It starts with a weird official declaration, issued in December 2017, which states that Serbian government, in order to keep up with the recently passed EU virtual money regulations, plan to extend the adaption of local crypto-laws for the following five years. (Of course, what that supposed to mean is anybody's guess.)
Additionally, despite crypto has not being yet officially declared illegal in the country, it's not clear whether Serbian can own BTC, ETH or likes (the status of which as some form of money still remains officially undefined) without violating NBC confusing rulings. Not to mention that country's citizens are prohibited from holding foreign banks accounts and obliged to disclose all transactions exceeding 15,000 EUR, which puts all local wallet holders and crypto-exchange users in a very peculiar legal position. To summarize, today, in order to be part of the Serbian crypto-movement, you have to be tenacious, vigilant and prepared.
Business Notes for Startups Founders:
political climate: moderately friendly;
economic climate: not friendly;
regions to focus: locally;
industries to focus: FinTech, e-commerce, EduTech and entertainment;
major limitations: slowing GDP growth rate, dominance of big, corporate, government linked businesses, high taxes, low-income population, excessive administrative barriers;
stimulus: low costs, good education, low competition;
opportunities: to develop Internet based e-services for compact users groups.
Cryptocurrencies and ICOs (outlook): uncertain (negative).
The author: Svyatoslav (Svet) Sedov
Angel investor and founder of The First International Incubator for Silicon Valley Companies (FirstInternational.In) in the Bay Area, CA, USA.
Twitter: https://twitter.com/SvjatoslavSedof
