1.  How is crypto regulated?
  2.  Are the following activities regulated or unregulated in your jurisdiction? ― Exchange (buy/sell) ― Custody (hold) ― Borrowing/lending ― Yield/staking
  3. How long would establishing a cryptoasset business/obtaining a license in your jurisdiction take?
  4. What would be the approximate overall cost of obtaining a licence?
  5. What is the probability (%) of success in obtaining a licence?
  6. What other limitations are there in your jurisdiction when looking to set up a cryptoasset business? E.g., Compliance requirements and physical presence

jurisdiction

Slovakia

Disclaimer: This chapter was last updated on 6 September 2023 and does not reflect any subsequent developments. The information provided is intended for general informational purposes and should not be construed as legal advice.

1. How is crypto regulated?

AML RegulationFinancial Services Regulation
The Fifth Money Laundering Directive (5MLD) was transposed into Slovak law by way of an amendment to the Slovak AML Act (Act No. 297/2008 Coll., as amended) and covers persons providing services related to virtual currencies, not mentioning the crypto assets.

Financial services are regulated by a wide range of legal Acts and Regulations, in particular the Payment Services Act (Act no. 492/2009 Coll.), the Securities Act (Act no. 556/2001 Coll.), Financial Intermediation Act (Act no. 186/2009 Coll.) and the Stock Exchange Act (Act no. 429/2002 Coll.).

Crypto assets are not covered by a specific Slovak financial services regulation. The Slovak regulators are awaiting for MiCA regulation.

2. Are the following activities regulated or unregulated in your jurisdiction? ― Exchange (buy/sell) ― Custody (hold) ― Borrowing/lending ― Yield/staking

AML RegulationFinancial Services Regulation

The AML Act regulates provision of virtual currency (payment tokens) services. Operator of the virtual currency exchange or provider of virtual currency wallet services in the Slovak Republic is considered an obliged entity under the AML Act and therefore regulated as such. Therefore, operation of virtual currency exchange and provision of service of virtual currency wallet (custody) are regulated by the AML Act.

Lending/ borrowing and yield farming / staking is not separately covered as a regulated activity. However, when included in operation of virtual currency exchange or provision of virtual currency wallet services, the activity is regulated.

All crypto asset related service providers need to follow the rules on identification and due diligence of their clients, establish internal policies, report suspicious activities and other AML/CTF requirements.

No financial service license for buying/ selling or exchange of crypto assets is required.

The same should also apply to custody of cryptocurrencies, provided that no portfolio management service is provided.
No financial service license is required for borrowing/lending of crypto assets, except for a trade license issued by the Slovak Trade Authority. However, it is not clear whether lending of crypto assets, or borrowing against crypto assets when provided to consumers would not require a specific consumer credit license.

Providing services related to virtual assets, especially operation of virtual currency exchange or provision of service of virtual currency wallet (custody) in the Slovak Republic on a continuous basis for profit would require a specific trade license issued by the Slovak Trade Authority.

Mining or validating transactions do not require a license.

Certain other services, such as trading with exchange tokens, derivatives or management of assets containing crypto assets would require a MiFID II or AIFM license.

3. How long would establishing a cryptoasset business/obtaining a license in your jurisdiction take?

AML RegulationFinancial Services Regulation

There is no need to establish a license under AML regulations.

The obliged person must follow the Slovak AML rules with respect to services carried out within the Slovak Republic.

Acquiring trade license is a relatively easy and straightforward process.

Once the standard corporate documents are gathered, it may be obtained within five business days. In case of a non-Slovak citizen who would be the executive director of the entity applying for the trade license, the proof of completed high school / secondary grammar school education is required. Also, a non-OECD citizen would need to have the residence permit.

Obtaining a consumer credit license, payment institution/EMI license or another financial license (under MiFID II or AIFM) would take approx. 8 to 20 months.

4. What would be the approximate overall cost of obtaining a licence?

AML RegulationFinancial Services Regulation
N/A

Obtaining the trade license usually costs between EUR 3,000-5,000. The highest costs relate to obtaining and translating the corporate documents, if needed. The above estimate does include the cost of establishment of a branch and a subsidiary that will likely be required.

To the above advisory services should be added the following costs:

  • One-time court fee for registration with the Commercial Register EUR 150.
  • Fee for the notarization of the signature depends on the country of notarization (for Slovakia up to EUR 4 per signature).
  • Fee for official translation by a certified Slovak translator to the Slovak language EUR 25 – 35 per page for translation.

The cost of obtaining a financial license (consumer credit license, payment institution/EMI license or other financial license (under MiFID II or AIFM)) if needed, will be considerably higher.

5. What is the probability (%) of success in obtaining a licence?

AML RegulationFinancial Services Regulation
N/A

Obtaining a trade license is a straightforward exercise, however; the Trade Authority will require that the service provider has a branch or a subsidiary established in the Slovak Republic, unless the trade license is sought by an EU entity. The rejection of granting the license is unlikely.

Obtaining a financial license is relatively difficult and complicated, however; if all conditions for issuing the license are met, the National Bank of Slovakia must issue the license.

6. What other limitations are there in your jurisdiction when looking to set up a cryptoasset business? E.g., Compliance requirements and physical presence

AML RegulationFinancial Services Regulation

Some requirements are set out below, however; this is not an exhaustive list. It is necessary to:

  • take appropriate steps to identify and assess the risks of money laundering and terrorist financing which the business is subject to;
  • assess the ML/TF risks related to any new technologies prior to launch and take appropriate measures to manage and mitigate those risks;
  • undertake customer due diligence (CDD) when entering into a business relationship or occasional transactions;
  • apply more intrusive due diligence, known as enhanced due diligence (EDD), when dealing with customers who may present a higher risk; and
  • ML/TF risk. This includes customers who meet the definition of a politically exposed person (PEP).

There are currently no specific Slovak regulations in relation to crypto assets. The National Bank of Slovakia follows the views of the EBA and other EU authorities in respect of crypto assets regulations.

There are no clear rules or guidelines to define activities as continuous in the Slovak Republic. However, a business activity provided for six months or more in the Slovak Republic is generally deemed a continuous activity.