Decision on the Manner of Calculating the Minimum Capital and Reporting on Minimum Capital of a Virtual Currency Service Provider

RS Official Gazette, No 49/2021 Pursuant to Article 10, paragraph 1 and Article 54, paragraphs 5 and 8 of the Law on Digital Assets (RS Official Gazette, No 153/2020), and Article 18, paragraph 1, item 3) of the Law on the National Bank of Serbia (RS Official Gazette, Nos 72/2003, 55/2004, 85/2005 – other law, 44/2010, 76/2012, 106/2012, 14/2015, 40/2015 – CC decision and 44/2018), the Governor of the National Bank of Serbia hereby issues D E C I S I O N ON THE MANNER OF CALCULATING THE MINIMUM CAPITAL AND REPORTING ON MINIMUM CAPITAL OF A VIRTUAL CURRENCY SERVICE PROVIDER Introductory provisions

1. This Decision sets out the manner of calculating the minimum capital of a digital asset service provider in the part of operations pertaining to virtual currencies (hereinafter: service provider), as well as the manner and terms of reporting on the minimum capital of the service provider. The provisions of this Decision shall apply to a company submitting an application for a licence to provide one or more virtual currency services from Article 3, paragraph 1 of the Law on Digital Assets (hereinafter: the Law), as well as to a service provider licensed by the National Bank of Serbia to provide these services. Minimum amount of capital
2. The minimum capital of a company applying for a licence to provide virtual currency services shall be no less than:

1. EUR 20,000 in the dinar equivalent at the official middle exchange rate of the dinar against the euro determined by the National Bank of Serbia – if the company intends to provide virtual currency services referred to in Article 3, paragraph 1, items 1) to 6) of the Law (reception, transmission and execution of orders relating to the purchase and sale of virtual currencies on behalf of third parties, purchase and sale of virtual currency for cash and/or scriptural money and/or e-money, exchange of virtual currencies for other virtual currencies or other digital assets, custody (safekeeping) and administration of virtual currencies on behalf of virtual currency users and the related services, services pertaining to the issuing, offering and placing of virtual currencies on a firm commitment basis (underwriting) or without a firm commitment basis (uncommitted placement/agent services), and maintaining a register of pledges on virtual currencies);

2 2) EUR 50,000 in the dinar equivalent at the official middle exchange rate of the dinar against the euro determined by the National Bank of Serbia – if the company intends to provide virtual currency services referred to in Article 3, paragraph 1, items 7) and 8) of the Law (virtual currency acceptance/transfer services and virtual currency portfolio management); 3) EUR 125,000 in the dinar equivalent at the official middle exchange rate of the dinar against the euro determined by the National Bank of Serbia – if the company intends to provide virtual currency services referred to in Article 3, paragraph 1, item 9) of the Law (operation of a virtual currency trading platform). If a company applying for a licence to provide virtual currency services intends to provide virtual currency services for which different amounts of the minimum capital from paragraph 1 of this Section have been prescribed, such company must have minimum capital in the amount prescribed only for the virtual currency service or services for which the highest amount of the minimum capital has been prescribed. 3. The minimum capital referred to in Section 2 of this Decision may be monetary and in-kind (e.g. software), and at least a half of the minimum capital shall be subscribed and paid in money. 4. A service provider shall maintain its capital at all times at no less than the amount of minimum capital referred to in Section 2 of this Decision. Manner of calculating minimum capital 5. The minimum capital of a service provider shall be the sum of the following elements of core capital, less deductibles from Section 8 of this Decision:

1. share capital subscribed and paid in against issued ordinary and preferential shares, excluding cumulative preferential shares in the amount of the nominal value of paid in shares (for a service provider operating in the form of a joint stock company), or the capital subscribed and paid in under share acquisition in the amount of paid-in and brought-in contributions (for a service provider operating in other legal forms);
2. relevant share premium, i.e. amount paid above nominal value of subscribed ordinary and preferential shares (for a service provider operating in the form of a joint stock company), or the amount paid above the value of paid-in and brought-in contributions (for a service provider operating in other legal forms);
3. profit of the service provider;

3 4) reserves from profit (legal, statutory and other reserves). The elements from paragraph 1 of this Section shall be included in the calculation of the minimum capital only if they are deducted for all potential tax liabilities and not burdened by any future liabilities, and if the service provider can use them unconditionally, fully and without delay for the coverage of risk or losses as soon as the risk or loss occurs, including in the event of initiating a bankruptcy procedure or liquidation of the service provider. In addition to conditions from paragraph 2 of this Section, the following conditions must be met in order to include elements from paragraph 1, items

1. and 2) of this Section in the calculation of the minimum capital:
2. elements do not have a specified maturity and cannot be withdrawn;
3. the service provider is entitled not to pay the profit or dividends, or to restrict the payment of the profit or dividends with respect to these elements.

6. The profit of the service provider from Section 5, paragraph 1, item 3) of this Decision which is included in the calculation of minimum capital shall consist of the profit from previous years that is unburdened by any future liabilities, which the competent body of the service provider has decided to include in the core capital.
7. Reserves from profit which the service provider includes in the minimum capital calculation shall include all types of the service provider’s reserves that are established on the basis of a decision of the service provider’s general meeting or another competent body or person exercising the powers of general meeting and debited to the profit after taxation. The reserves amount shall also include capital gains realised through the acquisition and sale of own shares/stake of the service provider, while capital loss incurred on the same ground shall be deducted from the reserves amount.
8. Deductibles from core capital shall include:

1. losses of the current year and from previous years;
2. intangible assets;
3. acquired own ordinary and preferential shares, excluding cumulative preferential shares (for a service provider operating in the form of a joint stock company), or acquired own stakes (for a service provider

4 operating in other legal forms), in the amount of their nominal value increased by the share premium; 4) ordinary and preferential shares, excluding cumulative preferential shares (for a service provider operating in the form of a joint stock company), or stakes (for a service provider operating in other legal forms) which the service provider received in pledge – in the amount equal to the value of receivables secured by pledge of shares or stake, or the amount of the nominal value of those shares increased by the relevant share premium or stake, whichever is lower; 5) regulatory value adjustments according to international reporting standards and/or international accounting standards. Intangible assets referred to in paragraph 1, item 2) of this Section shall include digital tokens, goodwill, licenses, patents, brands, trademarks and concessions, as well as other forms of intangible assets measured at fair value in accordance with the international reporting standards and/or international accounting standards. Intangible assets shall be expressed in net amount, more precisely the value of these assets shall be reduced by their accumulated depreciation and other value adjustments. Regulatory value adjustments referred to in paragraph 1, item 5) of this Section shall include:

1. unrealised losses in respect of securities available for sale;
2. other net negative revaluation reserves that do not refer to deductibles from core capital;
3. profit on the service provider’s liabilities measured at fair value and reduced due to the change in the service provider’s credit rating. Reporting on minimum capital

9. The service provider shall submit to the National Bank of Serbia the following report on the minimum capital – using the MIN KAP – VV Form, whose contents are laid out in Annex 1, which is integral to this Decision. The service provider shall submit the report from paragraph 1 of this Section to the National Bank of Serbia on a quarterly basis, namely:

1. the Q1 report, with data as at 31 March of the current year – by no later than 20 April of the current year;
2. the Q2 report, with data as at 30 June of the current year – by no later than 20 July of the current year;
3. the Q3 report, with data as at 30 September of the current year – by no later than 20 October of the current year;

5 4) the Q4 report, with data as at 31 December of the current year – by no later than 5 March of the following year. 10. By way of derogation from Section 9 of this Decision, the service provider shall, at the request of the National Bank of Serbia, compile a report from that Section, with data as at the date designated by the National Bank of Serbia and submit it within the deadline specified by the National Bank of Serbia. Final provision 11. This Decision shall enter into force on the eighth day following its publication in the RS Official Gazette and shall apply as of 29 June 2021. D. No 6 G o v e r n o r 13 May 2021 National Bank of Serbia B e l g r a d e Dr Jorgovanka Tabaković, sign.