In the past 12 months, there have not been any notable advancements in Slovenia’s crypto sector. While the collapse of FTX and centralised crypto lenders may have impacted investor confidence and public perception, Slovenia did not experience any major developments that would be specific to its market. The majority of businesses affected or that even declared bankruptcies were generally not closely associated with the Slovenian market or its participants. As a result, the repercussions observed in the market were similar to those experienced by the entire industry.

However, one of the most prevalent shifts is the noticeable increase in industry leaders’ efforts to enhance AML and KYC measures. The next 12 months are likely to see a more significant surge in regulatory compliance, the adoption of internal supervision, and other forms of self-control. This shift is driven by the forthcoming implementation of the MiCA Regulation and the industry’s collective response to the lessons learned in the previous market cycle. It is evident that the market leaders now recognise the need to prioritise security, prudent and sustainable business operations and expansion over the previous “move fast and break things” approach.

Slovenia, despite its modest size, has established itself as a notable hub for the exploration and utilisation of blockchain technology. It proudly holds the distinction of being the birthplace of the world’s longest-running cryptocurrency exchange and ranks among those countries with the highest number of ICOs launched per capita during the ICO frenzy of 2017–2018. In recent years, Slovenia has witnessed the emergence of diverse blockchain-related initiatives, start-ups and projects, with a strong emphasis on sectors such as finance, supply chain, energy and governance.

Most notably, the following use-cases have either been widely discussed or been already partially or fully implemented.

• Supply chain management: blockchain technology is being used for enhancing transparency and traceability in supply chains. It enables businesses to track the movement of goods, verify authenticity and reduce fraud; for example, Slovenian wine producers have been utilising blockchain to verify the origin and quality of their wines, ensuring transparency for consumers.
• Financial services: several banks and financial institutions have been exploring blockchain for cross-border payments and remittances, which can increase speed and reduce costs. Additionally, blockchain-based digital identity solutions are being developed to improve customer onboarding and identity verification processes.
• Energy sector: players in the (solar) energy sector in Slovenia have been experimenting with use of blockchain in enabling peer-to-peer energy trading, ensuring transparent and efficient energy transactions by facilitating the exchange of excess energy between producers and consumers.
• Governance and public services: Slovenian authorities have explored blockchain for applications such as land registry, intellectual property rights and voting systems. However, no plans for pilot development or research grants currently exist.
• Tokenisation and asset management: Slovenia is home to a pioneering platform in the field of digital asset management, specialising in tokenisation and allowing users to invest in a diverse range of cryptocurrencies. This platform was founded in Slovenia and continues to operate from the country.

As previously mentioned, the knowledge and sentiment surrounding cryptocurrencies and decentralised finance (DeFi) among the general public in Slovenia surpasses the average in the European Union (EU). Likewise, according to Google Trends analytics, crypto “buzzwords” are searched on average more in Slovenia than anywhere else in the EU. Consequently, it comes as no surprise that DeFi protocols – including automated market makers, wallet aggregators, decentralised synthetic investment platforms, decentralised prediction markets, decentralised stablecoins, and decentralised lending platforms – have gained significant popularity among the more crypto-savvy users in Slovenia.

However, Slovenia does not have any specific regulations addressing DeFi protocols. The regulatory position on DeFi in Slovenia is relatively limited or practically non-existent. On 1 January 2021, the Slovenian Securities Market Agency (ATVP) issued a warning “regarding investment in crypto-assets” where it revealed its most recent general stance on crypto-assets. The ATVP pointed out that the vast majority of crypto holdings (Bitcoin, Ether, etc) do not constitute financial instruments, and that it is therefore not competent to supervise their trading. The ATVP also noted that lately the emphasis has been on development, and as a result, also on investments in decentralised finance, and warned that the technology that enables it is still being developed and is untested, while the platform providers that enable this type of business are not supervised entities.

During the grand opening of EXPO 2020 Dubai, Slovenia made history as the first country globally to launch NFTs to promote the results of the country’s economy and tourist destinations – a collection of 15,000 unique digital 3D icons, and exclusive panoramic and 360-degree high-resolution photos. It goes without saying that the overall sentiment towards NFTs in Slovenia, including among government entities, is undoubtedly positive.

Although numerous mainstream NFT marketplaces have gained significant traction among Slovenian enthusiasts, no local platforms or projects have achieved comparable success thus far. Additionally, there are currently no specific regulations addressing NFTs in Slovenia, and the relevant regulatory bodies have yet to establish a clear position on the matter.

In Slovenia, market participants using blockchain technology or cryptocurrencies are subject to the provisions of the Slovenian Prevention of Money Laundering and Terrorist Financing Act (ZPPDFT-2) which transposed 5AMLD and also followed the latest Financial Action Task Force (FATF) recommendation when regulating virtual currency services and their service providers. It lays down measures for the detection and prevention of money laundering and the financing of terrorism. Legal or natural persons are also subject to measures under the Act, when carrying out their business or professional activity of providing virtual currency services or other transactions involving such services. In particular, the Act stipulates that virtual currency service providers having their registered office or a branch in Slovenia must register in the register of virtual currency service providers held by the Slovenian Office for Money Laundering Prevention. For further information, please refer to 4.3 KYC/AML/Sanctions.

Since 23 March 2023, the DLT Regulation is fully applicable in Slovenia. The main goal of this Regulation is to enable use of distributed ledger technology (DLT). The DLT pilot regime is an experimental sandbox-like regime that allows market operators to obtain targeted exemption from financial services legislation (MiFID, MiFIR, CSDR) in order to experiment with DLT in trading and settlement of financial instruments. Operators of DLT market infrastructure can request an exemption if they comply with conditions and additional requirements as determined by the DLT Regulation, and also demonstrate that the exemption is proportionate and justified by the DLT use.

The ATVP is the national competent authority responsible for granting authorisation.

Although not yet in force, it is worth mentioning that the European Parliament adopted the MiCA Regulation on 20 April 2023. When fully applicable by the end of 2024 or the beginning of 2025, the MiCA Regulation will thoroughly regulate the crypto-assets sector.

Lastly, the Slovenian Ministry of Finance issued the Capital Market Development Strategy for Slovenia 2023–2030. See more in 2.9 Other Government Initiatives.

FATF recommendations have been generally implemented in the Slovenian Prevention of Money Laundering and Terrorist Financing Act.

The regulatory bodies most relevant for businesses or individuals using blockchain in Slovenia are the Slovenian Office for Money Laundering Prevention, the ATVP and the Bank of Slovenia.

The Slovenian Office for Money Laundering Prevention holds the register of virtual currency service providers and supervises the registered entities. The Office also carries out tasks relating to the prevention and detection of money laundering, predicate offences and terrorist financing, as well as other tasks provided for by the law.

The Bank of Slovenia supervises the implementation of the provisions of the Prevention of Money Laundering and Terrorist Financing Act for legal or natural persons when carrying out their business or professional activity of providing virtual currency services or other transactions involving such services.

The ATVP is responsible for granting authorisations under the DLT pilot regime and its supervision.

Although there were no official notices or changes in regulatory stance, following the notable bankruptcies in the blockchain sector in 2022, feedback from market participants suggests lower willingness of commercial banks to provide banking services to crypto market participants.

There are no self-regulatory organisations or trade groups that perform a regulatory role with respect to businesses or individuals using blockchain in Slovenia.

However, there are some non-profit associations, such as Blockchain Think Tank Slovenia and the Bitcoin Society of Slovenia (Bitcoin društvo Slovenije), which describe themselves as collectors of ideas and proposals, while at the same time having access to relevant representatives from government, regulators and other public sector institutions to whom ideas and proposals from business, entrepreneurs, academics and individuals are forwarded in an open way.

To the authors’ knowledge, there is no currently ongoing litigation that would impact the blockchain sector in Slovenia.

There have been no important judicial decisions in Slovenia that would impact the blockchain sector. However, the Supreme Court of Slovenia did reach a decision in a criminal case regarding human trafficking, where the Court seized electronic wallets and confiscated cryptocurrencies.

To the authors’ knowledge, there have been no enforcement actions against any blockchain market participant in Slovenia.

Currently, there is no local regulatory sandbox; however, according to the Capital Market Development Strategy for Slovenia 2023–2030 issued by the Slovenian Ministry of Finance, a regulatory sandbox for Slovenia is in the set-up phase.

Trading with cryptocurrencies results in the following tax implications:

• occasional traders (individuals) are not taxed on their cryptocurrency gains; and
• business traders (legal entities, entrepreneurs) recognise their cryptocurrency trades through their profit and loss accounts, in line with general accounting principles.

Cryptocurrencies can be used for purchasing goods and services, if the seller agrees to accept them as “means of payment”. The fair market value of cryptocurrency received for the supplied goods or services (translated into euros, which is a legal currency) represents a taxable income for the seller.

According to the tax authority’s opinion, crypto-mining cannot be considered as “occasional activity”. Instead, crypto-mining income is always treated as taxable income, namely as “other income” for individuals or as “business income” for legal entities and entrepreneurs. However, crypto-mining is not taxable with VAT, as it is not considered as supply of goods or services.

In practice, the main uncertainty still revolves around the definition of “business activity” – namely, when does an “occasional trader” become a “business trader”? The tax authority has given some guidelines on business activity qualifiers (eg, number of trades, volume of trades, portfolio value, etc); however, no hard lines or threshold have been listed. A case-by-case approach is used for determining the potential existence of “business activity”.

The Slovenian Ministry of Finance issued the Capital Market Development Strategy for Slovenia 2023–2030, with the following goals.

It intends to establish a single platform for investing in SMEs, raising capital for SMEs and at the same time ensuring efficient, easy, safe and transparent trading.

The new innovative financial infrastructure for investing in SMEs will be designed as a DLT TSS, in line with the DLT Regulation. It will operate on the basis of DLT technology as a common trading and settlement system (DLT TSS).

Such DLT TSS platform will enable the following:

• offering access to trading without an intermediary, thus also providing retail investors with direct and low-cost access;
• under the DLT Regulation, the regulator grants an exemption from the intermediation obligation in order to provide retail investors with direct access and allow them to trade for their own account; and
• allowing trading of shares in SMEs which are limited liability companies and allowing more inclusive access for retail investors to the hitherto “restricted” investment in SMEs and innovative PE companies.

In 2019, Slovenia was the first member state of the EU to launch the national test blockchain infrastructure SI-Chain, which enabled testing of existing and new blockchain applications for the public and private sector. SI-Chain is built on a HashNET technology, which employs DLT and a consensus algorithm that keeps all positive characteristics of blockchain technology, while increasing throughput to more than 20,000 transactions per second.

There are no specific provisions governing the transfer of ownership of digital assets under Slovenian law. The rules of Slovenian law regarding ownership rights and transfer of ownership can apply where a digital asset can be characterised as a type of asset under the existing Slovenian laws (eg, security, deposit, e-money, other type of property or regulated financial instrument). However, there is considerable lack of clarity around classifying digital assets under the existing legal regulations.

For tax purposes, the Slovenian tax authority has taken the position that virtual currencies be treated as movable property (where the income from trading in virtual currencies is earned by a natural person) or as financial investment (where the income from trading in virtual currencies is earned in the course of business activity). 

Currently, the prevailing view in Slovenia is that crypto tokens, or so-called embedded tokens, whose value is depleted with use in the blockchain, are (merely) intangible property. They cannot be placed in any of the main categories of civil law. Civil law therefore does not impose any requirements on – and accordingly no obstacles to – their transfer.

The common practice is to follow the technology – ie, the transfer takes place by means of a private key transfer. The disposition is thus effectively in the form of the use of a public key and a private key.

Please note that there is no legal theory on when transfers of digital assets on a digital blockchain are considered final. Further, no public authority or court of law in Slovenia has ever had to rule on such an issue.

The only definition of digital assets (as a virtual currency) is provided under the Slovenian Prevention of Money Laundering and Terrorist Financing Act, which is very broad and does not provide any official legal categorisation of different forms of digital assets.

The position of the Slovenian supervisory authorities on the categorisation of digital assets mirrors the (standard) partition between investments, utility tokens and cryptocurrencies, taking into consideration that the categorisation is always arbitrary and may be subject to different criteria, where each token is subject to individual judgement (ie, the legal characterisation of any token and the rights, obligations or other consequences attached to holding the token must be determined on a case-by-case basis).

Where digital assets meet existing definitions of regulated financial instruments under the EU Markets in Financial Instruments Directive (MiFID2) and Slovenian law or qualify as e-money under the E-Money Directive, they would be considered as such.

With the MiCA Regulation, a much clearer framework with respect to digital assets will be established. All crypto-assets not subject to other regulation (ie, the MiCA Regulation does not apply to security tokens which would qualify as financial instruments for the purposes of MiFID2, deposits, securitisation positions, insurance or pension products), will fall under the definition of crypto-assets in the MiCA Regulation and as such will be categorised as “asset-referenced tokens”, “e-money tokens” or “utility tokens”. 

Digital assets whose value is pegged to a second asset (ie, stablecoins) are not directly regulated under Slovenian law. Further, no distinction is made between stablecoins backed by deposits of fiat currency and algorithmic-backed stablecoins.

It should be noted that in 2018 the Bank of Slovenia issued an opinion that virtual currencies are not classified as electronic money (e-money) under the Payment Services, Services for Issuing Electronic Money and Payment Systems Act, which transposes the Second Electronic Money Directive (EMD2). Due to developments in the forms and designs of cryptocurrencies in recent years, in the authors’ opinion it cannot be excluded that with respect to some cryptocurrencies, existing regulations should be applied (eg, certain stablecoins may meet the criteria for e-money – in which case a licence for a payment institution or an e-money institution may be required).

The Euro Adoption Act does not restrict companies in their decision to accept other means of payment that are either regulated (eg, euro banknotes and coins) or not. Accepting cryptocurrencies as a means of payment is therefore not illegal in Slovenia.

According to publicly available information, in 2019 there were already over 300 providers across Slovenia which accepted cryptocurrencies as a means of payment. 

There are no specific provisions governing NFTs or related activities under Slovenian law. Nevertheless, the general principles on consumer protection, competition, marketing, the General Data Protection Regulation (GDPR), protection of intellectual property rights, etc may be applicable.

There is still no clear position of the tax authority on VAT treatment of NFTs, as NFTs can assume different roles in transactions (eg, NFTs can materialise as vouchers, proof of title, electronic service, etc).

Generally speaking, sales of NFTs can be taxed with VAT if they represent “business activity” of the seller, who acts as a “taxable person”. Consequently:

• frequent (re)sellers of NFTs should be treated as “taxable persons” for VAT purposes – they should register for VAT (and charge VAT on NFT sales), if their taxable turnover in the last 12 months exceeds EUR50,000; and
• occasional (re)sales are not considered as “business activity” and are therefore outside VAT scope.

Within the blockchain community, Slovenia is best known for Bitstamp – a centralised cryptocurrency exchange that was established in 2011 and is currently headquartered in Luxembourg. While it was founded by Slovenian nationals Nejc Kodrič and Damijan Merlak, and some operations still remain in the country, it is not primarily based in Slovenia. Bitstamp gained popularity as one of the earliest and longest-standing crypto exchanges, with user-friendly interface, robust security measures and compliance with regulatory standards. Consequently, it is unsurprising that Bitstamp also emerged as the (centralised) trading venue of choice for Slovenian residents, though other market leaders are also widely used.

Slovenian residents currently enjoy unrestricted access to decentralised exchanges (or “DEXes”) without any negative stance or specific restrictions imposed by the authorities. It is possible to access and use all globally available protocols. To date, there have been no instances of IP address blocking or limitations imposed on accessing and engaging with DEX protocols in Slovenia.

Persons in Slovenia typically exchange fiat currency for cryptocurrencies through centralised exchanges or similar platforms. There is also a Slovenian brokerage company that offers investment in cryptocurrencies to its customers and several businesses that offer OTC exchange. However, just recently, after nine years in operation, the only business offering “cryptocurrency ATM services” shut down its operation in Slovenia. It cited an unfriendly legislative environment in the field of financial services and the lack of banking services available to crypto companies as the main reasons.

The Slovenian Prevention of Money Laundering and Terrorist Financing Act transposed 5AMLD and followed the latest FATF recommendation for regulating virtual currency services and their service providers (VASPs). Accordingly, the scope of the definition of virtual currency services is broader than that of 5AMLD. In defining VASPs (as obliged entities), the Slovenian Prevention of Money Laundering and Terrorist Financing Act further expands its scope to also include “other transactions included in these services”.

Like all other obliged entities under the Slovenian Prevention of Money Laundering and Terrorist Financing Act, VASPs are required to perform the following actions in order to detect and prevent money laundering and financing of terrorism.

• Customer identification: they are required to implement customer identification procedures to verify the identity of their users.
• Risk-based approach: they are required to adopt a risk-based approach to assess the level of risk associated with customers and transactions. This involves conducting customer due diligence measures that are commensurate with the identified risk level. Higher-risk customers and transactions may require enhanced due diligence procedures.
• Record-keeping: they have an obligation to maintain adequate records of customer transactions and related information. These records include transaction details, customer identification data, and any supporting documentation obtained during the customer due diligence process.
• Reporting obligations: they are also obligated to report suspicious transactions to the relevant authorities.

The following regulatory bodies are involved in overseeing and regulating markets for digital assets in Slovenia.

• The Office for Money Laundering Prevention is responsible for overseeing the compliance of financial institutions, including those operating in the digital asset space, with AML and KYC regulations.
• The ATVP is the regulatory authority responsible for supervising and regulating securities markets in Slovenia. Where individual digital assets would be classified as securities, the ATVP would have jurisdiction over their issuance, trading and offering activities.
• The Bank of Slovenia serves as the country’s central bank and has a role in supervising and regulating financial institutions, including those engaged in digital asset-related activities.

To date, Slovenia does not have any regulations in place addressing fraudulent or manipulative practices in the markets for digital assets.

As there is no specific regulation applicable to re-hypothecation of assets by a digital asset exchange, this would generally fall within the terms of service of the exchange, and be subject to consumer protection laws (especially regulation of unfair contract terms and unfair business practices).

Businesses that provide online (“hot”) or offline (“cold”) storage solutions for private cryptographic keys fall within the scope of the definition of virtual currency services and are thus subject to the Slovenian Prevention of Money Laundering and Terrorist Financing Act. In addition, they may be subject to general financial regulations, data protection laws and cybersecurity requirements.

Fundraising through the creation and sale of coins intended to be used as part of a decentralised network – ie, an initial coin offering (ICO) – is not systemically regulated and supervised under current legislation.

There is no clear guidance on whether ICOs are considered “securities” activity or “commercial” activity since the categorisation of digital assets (as described in 3.2 Categorisation) is not clear. Currently, each ICO is subject to individual judgement by the Slovenian supervisory authorities in determining whether it interferes with any of the regulated areas and, as such, is subject to special obligations (eg, regulated financial activities).

In general, the regulation framework for digital assets applicable at the EU level also applies at the national level. Therefore, tokens which due to their nature and content qualify as financial instruments (under Directive 2014/65/EU on markets and financial instruments) or as e-money (under Directive 2009/110/EC on the taking up, pursuit and prudential supervision of the business of electronic money institutions) fall inside the regulated financial activities. Otherwise, tokens may fall outside the regulated financial activities.

Slovenian legislation has certain particularities regarding the classification of tokens as securities, and defines specific legal requirements for a financial instrument to be a security, for example:

• the securities must have a required form;
• the issuer needs to be identified; and
• there are certain essential components (eg, information) that a security must include.

Against this background, the ATVP has previously (ie, five years ago) taken the position that ICOs cannot constitute a public offering of (transferable) securities to the public, as the tokens cannot be classified as transferable securities due to the absence of at least two essential components that a security must include under Slovenian law.

Under Slovenian law, there is no specific regulation governing fundraising through the sale of coins by using a crypto-asset exchange as an intermediary – ie, an initial exchange offering (IEO).

However, depending on the token, in such cases the Securities Market Act and EU regulations such as the Markets in Financial Instruments Directive (MiFID), the Markets in Financial Instruments Directive II (MiFID II) or the MiCA Regulation (once in force) would apply to fundraising through the sale of tokens intended to be used as part of a decentralised network.

Airdrops or similar distribution mechanisms are considered to be a non-regulated activity under Slovenian law.

The MiCA Regulation (once in force) will provide guidelines regarding the special issuance of tokens through an airdrop or similar mechanism that does not necessarily involve a purchase. However, the MiCA Regulation will also implement restrictions in cases where purchasers are required to provide or to undertake to provide personal data to the issuer in exchange for those crypto-assets, or where the issuer of those crypto-assets receives from the prospective holders of those crypto-assets any third-party fees, commissions, monetary benefits or non-monetary benefits in exchange for those crypto-assets.

There is no special legal framework under Slovenian law regarding investment funds that invest in digital assets.

Investment funds, regardless of their activity, are governed by:

• the Investment Funds and Management Companies Act;
• the Act on Alternative Investment Fund Managers; and
• the Act on Forms of Alternative Investment Funds.

These generally implement EU legislation with respect to UCITS (ie, the EU UCITS Directive (Directive 2009/65/EC)) and AIFMs (ie, the AIFM Directive (Directive 2011/61/EU)).

There is no specific regulation under Slovenian law governing broker-dealers or other financial intermediaries that deal in digital assets.

However, a financial intermediary that performs activities with digital assets that are deemed financial instruments may be regulated by the Slovenian Market in Financial Instruments Act. Accordingly, the activities performed by the intermediary may require a licence from the ATVP, and the intermediary may have to meet certain organisational and capital requirements and fit and proper requirements in relation to its management.

In addition, licensing requirements could also be triggered under the Consumer Protection Act where dealings with digital assets by the financial intermediary would also fall within the scope of lending to consumers (eg, lending of e-money). 

There are no laws, regulations or binding precedents on the legal enforceability of contracts made in whole or in part through smart contracts. Thus, the provisions of civil law apply.

The general view of the legal community in Slovenia holds that there are two types of smart contract: those that are wholly smart, and those that are concluded orally or in writing, where subsequently only some contractual provisions that regulate the automatic act of performance are converted into computer code. In the latter case, only certain contractual provisions would be considered as forming a smart contract. From a legal perspective, the parallel concluded contract (in oral or written form) would be considered as a valid contract.

Where there is no parallel conclusion of the contract and all contractual provisions would be converted into computer code, such smart contract would need to meet all the preconditions for a valid conclusion of a contractual relationship:

• the contracting parties must have legal capacity and the capacity to perform;
• the object of the contract must be permissible;
• there must be concurrence of wills for the conclusion of the contract (without mistake or duress); and
• the contract must be concluded in an appropriate form.

According to Slovenian law, no particular formality is required for a contract to be valid, unless the law provides otherwise. In cases where the law demands a written form or even the form of a notarial deed or notarial certification of signatures, the smart contract would not be considered as in an appropriate form and would thus not be considered a valid contract. However, in cases where the law does not require particular form and where the smart contract (computer code with programmed contractual content) meets all the legal prerequisites for a valid contract, such an agreement would be considered valid and legally binding.

No legal theory, legislation or case law on whether developers would be considered fiduciaries has yet been espoused in Slovenia. However, the authors hold the view that it is unlikely that developers would be considered fiduciaries under Slovenian law. The concept of fiduciaries as it is known in the common law system (especially considering Tulip Trading Ltd v van der Laan) is not known under Slovenian law. Thus, a major legislative change would need to be made for developers to be considered fiduciaries.

In cases where a contractual relation exists, or where developers perform a wrongful act, liability could be imposed based on the general principles of damage liability, which would be assessed on a case-by-case basis.

Currently only virtual currency service providers (which have a seat or a branch in Slovenia) are regulated under the Slovenian Prevention of Money Laundering and Terrorist Financing Act and must register with the Office for Money Laundering Prevention prior to commencing their operation.

Notwithstanding the above, it should be noted that lending activity is regulated as a financial service under the Slovenian Banking Act but applies only to financial institutions. Additionally, the Consumer Protection Act applies to lending to consumers. Hence, licensing requirements could be triggered under Slovenian law for a non-financial institution if lending of digital assets would be considered as lending (eg, lending of e-money) and would fall within the scope of the Consumer Protection Act.

A licence requirement could also be triggered if any activity carried out on a decentralised financial (DeFi) platform would fall within the scope of payment services. Payment services are defined by the Slovenian Payment Services Act as:

• services enabling cash to be placed on a payment account, as well as all the operations required for operating a payment account;
• services enabling cash withdrawals from a payment account, as well as all the operations required for operating a payment account;
• execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider;
• execution of payment transactions where the funds are covered by a credit line for a payment service user;
• issuing of payment instruments and/or acquiring of payment transactions;
• money remittance;
• payment initiation services; and
• account information services.

In the territory of Slovenia, these activities can only be provided by a licensed payment service provider in the course of its business activity.

Various types of assets – eg, real property, movables and property rights (claims, business shares, IP rights, etc) – can be subject to a security interest under Slovenian law.

As mentioned in 3.1 Ownership, there is a lack of clarity on the classification of digital assets under existing legal regulation. If a digital asset can be characterised as a type of asset under existing regulation (eg, security, deposit, e-money, other type of property or regulated financial instrument), then security (eg, pledge on movable property or property right, security assignment of claims) could be established under Slovenian law, but only if all the steps for establishing relevant security under Slovenian law can be implemented.

Note that establishing security on digital assets has not been court-tested yet.

There are no regulatory requirements under Slovenian law for investors to transfer their digital assets to a custodian. However, if the investor is a licensed alternative investment fund or a UCITS, a depositary must be appointed pursuant to:

• the Slovenian Investment Funds and Management Companies Act; and
• the Slovenian Act on Alternative Investment Fund Managers.

In this respect, the MiCA Regulation is introducing a significant change by implementing the activity of providing custody and administration of crypto-assets on behalf of clients within the definition of crypto-asset services. Hence, special requirements will apply to such providers, as will new guidelines with respect to obligations of issuers of asset-referenced tokens (including the rules on the custody of reserve funds).

Currently, there is no local law or other regulation applicable to data privacy or protection with respect to the use of blockchain-based products or services. Thus, when a blockchain contains personal data, the General Data Protection Regulation (GDPR) and the Slovenian Personal Data Protection Act (ZVOP-2) apply. The Slovenian Information Commissioner has not yet issued any opinion or guidelines in this regard. The European Data Protection Supervisor issued its Opinion on the Proposal for a Regulation on Markets in Crypto-assets and amending Directive (EU)2019/1937 on 24 June 2021.

The use of the GDPR provisions is also envisaged in the preamble of the DLT Pilot Regime Regulation and the MiCA Regulation (not yet in force). There are several articles in both Regulations referring to personal data and applicability of the GDPR. For example, Article 101 of the MiCA Regulation stipulates that with regard to processing of personal data within the framework of the MiCA Regulation, the competent authorities shall carry out their tasks in accordance with the GDPR. Further, the MiCA Regulation imposes on issuers of asset-referenced tokens the obligation to have systems and procedures in place that are adequate to safeguard the availability, authenticity, integrity and confidentiality of data as required by the GDPR.

See 8.1 Data Privacy.

There are currently no regulations applicable to the mining of crypto-assets through a proof of work-based consensus mechanism, except for tax regulation of income from virtual currency mining (see 2.8 Tax Regime).

Initially, the Slovenian company NiceHash provided an open marketplace for hashpower where users could lease or rent their miners.

There are currently no regulations applicable to the mining of crypto-assets through a proof of stake-based consensus mechanism, nor are there any regulations in respect of staking-as-service business models. As far as is known, no major staking-as-service provider is based in Slovenia.

Decentralised autonomous organisations (DAOs) are a side of the blockchain market that has probably seen the least amount of interest and development in Slovenia. This is understandable both due to its niche and somewhat advanced-user nature and to Slovenia’s smaller market size. There have not been any local implementations of DAOs to date – in any case, there have been no attempts to purchase an original copy of the Slovenian Constitution.

However, it is worth noting that Slovenia boasts a significant developer base that is actively engaged with or contributes to well-known DAOs, with MakerDAO being particularly prominent. These developers are either directly involved with DAO projects or with building innovative solutions on top of existing DAO frameworks.

Due to the absence of any implemented DAOs in Slovenia, the authors cannot offer any insight into local best-practices of DAO governance structures and processes.

While Slovenia has yet to witness any actual implementations of DAOs, it is possible that existing regulations applicable to traditional legal entities, such as associations or co-operatives, could be relevant to certain aspects of DAO operations in Slovenia. These regulations may include company law, tax regulations, consumer protection law, and any other applicable law depending on the nature of the DAO’s activities.