Legal Vacuum Allows Criminals, Terrorists To Stay Undetected In Kosovo While Investing In Crypto Mining

The EU-facilitated Belgrade-Pristina dialogue has been initiated to normalize relations between Serbia and Kosovo and, among others, reach an agreement on energy supply to the northern Serb-majority municipalities of Mitrovica, Leposavic, Zubin Potok, and Zvecan. While Serbia’s state-owned power producer waits to receive a license to operate under the Kosovo transmission system, Kosovo’s transmission system operator cannot charge its service in the north. In return, people in the north have not been paying electricity bills for over two decades, attracting many cryptocurrency enthusiasts wishing to profit under the present conditions. Highly likely, among them are criminals, terrorists whose illegal activities involve investing, using cryptocurrencies.

On September 2nd, 2020, Kosovo’s transmission system operator (KOSTT) commenced operating independently of Serbia based on a Connection Agreement signed with the European Network of Transmission System Operators (ENTSO-E). KOSTT has been serving as an independent regulator ever since across the whole of the country. Concurrently, a subsidiary of Serbia’s state-owned power producer Elektroprivreda Srbije covering the territory in the north, ElektroSever, applied for an electricity supply license with Kosovo’s Energy Regulatory Office (ERO). ElektroSever remains licenseless as the ERO board consists of only two members out of the five required to decide on licensing. With official Prishtina now forced to cover unpaid bills in the Serb-majority municipalities for another six months, the ethnic-blind and profit-driven crypto enthusiasts use the legal vacuum to mine bitcoin free of charge.

The number of miners and cryptocurrency investors has been renting basements, garages, and other free spaces between €500 and €1,000 per month as the value of bitcoin started to rise in 2017. Without paying electricity, some investors are profiting hundreds of thousands of euros with the cost of energy consumption in these municipalities around €12 million per year. Concurrently, law enforcement agencies and prosecutors face problems in pressing charges against these crypto enthusiasts with no law establishing monetary responsibility and accountability of crypto miners and traders expected to pay capital gains taxes. Furthermore, lack of cybercrime training for newly appointed judges and prosecutors undermines the country’s capacity to detect, deter, and discourage criminal and terrorist activities leaning on cryptocurrencies.

Kosovo faces no chances in confronting contemporary forms of crime and terrorism without a cryptocurrency law in place and trained police officers, prosecutors, and judges. The legal vacuum preventing ElektroSever from obtaining an active license and charging the consumed electricity in the north will continue to attract crypto investors from all around the country and beyond. However, once the ERO board becomes operational, KOSTT will get a chance to reduce losses and increase billing in the north. This change would force crypto miners and traders to pay taxes and repel those unwilling to comply with the procedures. It would help law enforcement agencies, too, in detecting remaining illegal traders and miners. Nevertheless, this would only be possible if Kosovo and Serbia continue to normalize relations within the EU-facilitated Belgrade-Pristina dialogue.