Croatia: (Crypto)tokens And Initial Coin Offerings - Croatian Legal Framework

An ICO or Initial Coin Offering is a new disruptive crowdfunding mechanism where a backer of a project founded on a blockchain technology receives an underlying token as opposed to "regular" crowdfunding or an IPO where the backer receives a product or a security. Funding is mostly made in the form of other tokens (eg bitcoin or ether).

Thus far in 2017, ICOs have raised more than USD 2 billion worldwide, whilst in June 2017 they had surpassed angel and early venture capital funding for internet companies. Such a rise is mostly due to lack of regulatory constraints, which allows for easy access to worldwide capital as well as avoidance of high initial costs. In addition, tokens are highly liquid, which makes them appealing for speculators.

Compared to Croatian start-ups, which in 2016 managed to collect only HRK 2.3 million via crowdfunding as against HRK 5.3 million in 2015, and whereby only 12 of 49 initiated projects have been able to collect the envisaged amount, ICOs may provide a way for necessary capital injections to Croatian start-ups which cannot access venture capital.

ICOs currently work in a grey area and most jurisdictions have no specially implemented regulation. Until such regulations are adopted, the existing law may apply to them. In this regard, the US Securities and Exchange Commission found that tokens offered and sold by a "virtual" organisation known as The DAO (digital decentralised autonomous organisation and a form of investor-directed venture capital fund) were securities and therefore subject to the federal securities laws.

Accordingly, certain ICOs as well trading with certain tokens may fall under the provisions of the Croatian Capital Markets Act (Zakon o tr~iatu kapitala; "CMA"). This would primarily depend on the structure of an ICO or token, ie whether the token would represent certain types of assets or rights (eg equity, securitised debt, etc), and hence be a financial instrument. Accordingly, entities trading or intermediating with such tokens would need to obtain a necessary licence from the Croatian Financial Services Supervisory Agency (HANFA) or the Croatian National Bank ("CNB").

Moreover, pursuant to the CMA (which transposes the Prospectus directive), issuers of securities, as risky assets, are usually obliged to issue a prospectus in order to protect inexperienced investors. The prospectus must be approved by HANFA. Therefore, legal entity issuing tokens – which would represent a security – via ICO would have to issue prospectus, unless one of the exemptions prescribed by the CMA applies. In this regard, there is no prospectus obligation when the value of the offered securities is less than EUR 5 million in HRK, which considering the amount of funds usually collected by Croatian start-ups via crowdfunding, seems like a sizeable threshold. 


What are (crypto)tokens? They are basically entries in a ledger, ie blockchain (blocks of digitally stored information that are cryptographically secured and linked in a chain), which may be accessed via a private key and reassigned to someone else by making a new entry in a ledger. Depending on the type of blockchain project, their underlying functionality may be to represent assets or rights, either on-chain (eg rights to use blockchain, rights to vote on blockchain, etc) or off-chain (eg proprietary ownership, equity rights, etc).

These tokens may thus be viewed as a commodity or an asset (basically IOUs), or as a security or financial instrument, provided there is legal acknowledgement. Each of these tokens may also become (crypto)currency if the social circle that accepts it as a (contractual) means of payment becomes large enough.

Besides a couple of opinions of the CNB on the status of bitcoin, the Croatian Government and regulators have no official position on the status of tokens or ICOs. Nevertheless, in 2013 the CNB announced that it will follow EU regulations regarding bitcoin, according to which the use of bitcoin does not violate any EU regulation. Then in June 2014, the CNB stated in a letter to the Croatian Tax Administration that bitcoin does not fall within any regulated category of means of payment, because according to the Croatian National Bank Act (Zakon o hrvatskoj narodnoj banci) and Foreign Exchange Act (Zakon o deviznom poslovanju) it does not constitute money, means of payment, foreign currency or foreign means of payment. It also stated that as the value of bitcoin does not reflect the value of (fiat) money which was received for it (ie it is not backed), it cannot be considered electronic money.

There are also several opinions of the Croatian Tax Administration regarding the treatment of bitcoin. The most recent of these refers to the conclusions from the ECJ's judgment in case C-264/14 regarding the VAT treatment of bitcoin, according to which bitcoin, being accepted by parties to a transaction, is considered a contractual means of payment as an alternative to legal tender. It was also concluded that bitcoin may not be considered tangible property, as its sole purpose is to serve as a means of payment, and that it neither represents security conferring a property right nor a security of a comparable nature.

On the basis of the ECJ's judgment and for the purpose of tax collection, the Croatian Tax Administration concluded that bitcoin is equivalent to a money-market instrument (type of financial asset) and that tax should be paid on revenues stemming from bitcoin trading. It is safe to assume, however, that this conclusion is a result of the Tax Administration wanting to forcefully subsume bitcoin under one of the expressly stipulated types of financial assets, which is both unnecessary and mistaken. In any case, the Tax Administration's conclusion should not be used for future interpretations of the legal status of bitcoin or any other token.  

A brief overview of the Croatian legal framework for tokens and ICOs is provided below. 

Payment services and electronic money

The Croatian Payment System Act (Zakon o platnom prometu), which transposes the Payment Service Directive – PSD I, should not apply to undertakings providing certain cryptocurrency services (eg cryptocurrency exchanges, such as bitcoin exchanges). Namely, the Payment System Act defines a payment transaction as an act of placing, transferring or withdrawing funds, whereas funds are deemed banknotes and coins, monetary claim against the payment service provider and electronic money. With this in mind, cryptocurrencies should not fall under any of the mentioned categories, primarily because they do not satisfy legal tender characteristics as there is no issuer (eg central or commercial bank), but are created directly within blockchain in line with the underlying code. In addition, the CNB expressly stated that bitcoin is not money.

As it does not differentiate the definition of "funds" from PSD I, the Payment System Act should not change following the implementation of PSD II. However, the Payment System Act will apply if the token is backed by or linked to funds (eg HRK, EUR, etc). In such a case, the token would represent monetary value issued by its issuer after receipt of funds for the purpose of making payment transactions. Undertakings issuing such tokens should register with the CNB as an electronic money institution and would also fall under its supervision in accordance with the Electronic Money Act (Zakon o elektroničkom novcu). The minimum share capital of an electronic money institution amounts to HRK 2,600,000 (approx. EUR 346,000), which is also the minimum of the electronic money institution's own funds (capital adequacy). The entire share capital must be paid in cash.

Anti-money laundering and Know Your Customer obligations

Although there are money laundering concerns linked to tokens, according to the Croatian Money Laundering and Terrorist Financing Prevention Act in force (Zakon o sprječavanju pranja novca i finacniranja terorizma; "AMLA"), its provisions should not apply to cryptocurrency exchanges, for example, as such services are not regulated thereby. However, the provisions of the AMLA apply to the electronic money institution, and thus if tokens are backed or linked to funds, the issuer would need to comply with the provisions of the AMLA.

Regardless of the above, considering the obligations of entities falling under the anti-money laundering provisions (eg depth analysis of customers) and that the AMLA defines assets very widely, being all means (including any means of payment), tangible or intangible, moveable or real, documents or instruments in any form, including electronic or digital, which prove ownership or right of ownership over assets, cryptocurrency exchanges still may face difficulties doing business with the credit institutions in which they plan or have opened transaction accounts.

In any case, the new proposal of the Money Laundering and Terrorist Financing Prevention Act, which transposes the 5th AML Directive, expressly prescribes anti-money laundering obligations to entities engaged in exchanging virtual currencies for fiat currencies and vice versa, as well as providers offering custodial services linked to virtual currencies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.