Seizing crime-related virtual assets remains a challenge in the Western Balkans.

Cryptocurrencies have become a double-edged sword in the Western Balkans, facilitating both legitimate economic activity and criminal enterprises. While Serbia and Albania have made significant strides in regulating virtual assets, other countries in the region still face considerable challenges in tracking and seizing crime-linked cryptocurrencies. The lack of comprehensive regulations, limited technical expertise and insufficient cross-border cooperation have resulted in only three documented cases of crypto asset seizures in the entire region. To effectively combat the growing threat of crypto-related crime, Western Balkan countries urgently need to strengthen their legal frameworks, invest in specialized training, foster public–private partnerships and enhance regional cooperation.

Cryptocurrencies are increasingly prevalent in both legal and illegal markets across the Western Balkans. In 2023, approximately 240 000 people in the region — primarily in Serbia — owned cryptocurrency,¹ with transaction volumes estimated at between US$25 billion and US$30 billion.² While crypto-related crime was once isolated, it has now become a sophisticated tool for criminal networks.³ Within the region, Montenegro has emerged as a major European hub for cryptocurrency use on darknet markets, while Albania, North Macedonia and Serbia have all experienced substantial increases in usage.⁴ The range of criminal activities has also expanded to include money laundering, fraud and illegal crypto mining.⁵ In one notable case, a major drug trafficker from Bosnia and Herzegovina invested directly in a crypto company, highlighting the growing intersection between traditional organized crime and digital finance.⁶

Unlike real brokerage firms that display stock market movements, call centres in Serbia that ran fake crypto investments ranked agents based on their success in scamming victims.

Photo: Ministry of Interior of the Republic of Serbia via N1 Belgrade

The seizure and confiscation of criminal proceeds is an essential strategy in the fight against organized crime. Asset seizure temporarily prevents criminal suspects from accessing or transferring their property pending a final court decision, thus ensuring that illicit gains remain available for potential confiscation. Once finalized, confiscation permanently deprives criminals of these assets and can help disrupt criminal groups by cutting off their financial resources and preventing reinvestment in further illegal activities.⁷

While some countries in the Western Balkans, including Albania, Kosovo, North Macedonia and Serbia,⁸ have made progress in confiscating traditional criminal assets such as cash and real estate, Bosnia and Herzegovina and Montenegro are still struggling with basic asset recovery.⁹ The seizing of virtual assets, however, is even more complex due to the speed of transactions, the challenges of tracing ownership, their borderless nature and regulatory gaps. These difficulties are particularly pronounced in the Western Balkans, where many countries lack comprehensive regulatory frameworks and the technical expertise necessary for effective cryptocurrency oversight.¹⁰

Current practices for seizing crypto assets in the Western Balkans rely heavily on international law enforcement cooperation, in particular through agreements with Europol and Eurojust, which provide a legal framework for cross-border investigations. Public–private partnerships have also played a crucial role in tracing crypto assets. However, significant challenges remain. The region faces legal gaps, limited human resources and insufficient technical expertise to effectively trace crypto assets across decentralized and pseudonymized transactions, making the seizure and confiscation difficult.

Seizure and confiscation gaps

The Western Balkans lack a strong legal framework for confiscating cryptocurrencies linked to criminal activity, although Serbia has made some progress in this regard. According to a senior expert on organized crime, in Serbia it is possible to seize crypto assets by following general criminal procedures and obtaining a judge’s approval.¹⁷ Serbia has also developed a handbook on the handling of electronic evidence, which provides a step-by-step procedure for the seizure of cryptocurrencies.¹⁸ Although procedures are not legally binding, the handbook guides police officers, prosecutors and judges through procedural and technical steps in crypto investigations based on INTERPOL and Council of Europe standards. Serbia’s interior ministry also has a dedicated chapter on cryptocurrencies in its standard operating procedures.¹⁹

The lack of regulation on virtual asset confiscation in the Western Balkans is not unexpected, as only three out of six countries in the region have adopted specific laws on cryptocurrencies. Albania and Serbia were the first to introduce dedicated legal frameworks: Albania passed a law on financial markets based on distributed ledger technology in May 2020,²⁰ while Serbia adopted a law on digital assets in December the same year.²¹ In November 2024, Kosovo also introduced a law on crypto assets,²² but implementation has yet to begin as the bylaws are still pending adoption.²³

Other Western Balkan countries have regulated virtual assets in a limited way through amendments to existing laws. North Macedonia updated its anti-money laundering laws to include virtual assets in July 2022.²⁴ In Bosnia and Herzegovina, only the Republic of Srpska has introduced crypto-related regulations, which it did by amending the law on securities in 2022.²⁵ Montenegro does not directly regulate crypto assets, but its financial intelligence authority has clarified in 2024 that the country’s anti-money laundering legislation requires monitoring of crypto wallet transactions.²⁶

As highlighted in the Global Crypto Adoption Index 2024, the enforcement of crypto-related regulation is inconsistent across the Western Balkans.²⁷ The index, which ranks 151 countries, shows significant differences within the region. Serbia ranks the highest (49th), indicating a more active crypto market with greater public and private engagement. In contrast, Albania (109th) and Montenegro (127th) show minimal adoption, suggesting a smaller market or weaker regulatory frameworks. Bosnia and Herzegovina (81st) and North Macedonia (98th) fall in the middle, suggesting moderate levels of crypto use.²⁸

Legally, Montenegro and Bosnia and Herzegovina (at the entity level) have the weakest crypto regulatory frameworks in the region. This is particularly challenging for Montenegro, which tends to offer favourable taxation regimes for cryptocurrency investments, positioning itself as a potential crypto haven. However, without adequate regulation and oversight, this approach carries significant organized crime risks.²⁹

On the other hand, Bosnia and Herzegovina’s first national threat assessment on virtual assets found that crime-related cryptocurrency transactions were minimal,³⁰ but this may be underreported due to limited investigative tools and regulatory oversight. Despite the low number of reported cases, Bosnia and Herzegovina remains vulnerable to money laundering using cryptocurrencies, driven by weak institutional oversight, limited technical expertise and fragmented inter-agency cooperation.³¹

The varying levels of cryptocurrency regulation and enforcement in the Western Balkans reflect differences in national priorities, human capacity and technical expertise. In Bosnia and Herzegovina, for example, in addition to an underdeveloped legal framework for asset seizure, the agency responsible for asset management does not have a dedicated blockchain team.³³ The lack of human resources limits its ability to handle crypto-related cases. North Macedonia faces similar challenges,³⁴ although the government has promised regulation of virtual assets by 2026.³⁵

Public–private partnerships to combat crypto-related crime remain underdeveloped in the region, largely due to low financial literacy and limited technological expertise among regulators.³⁶ Serbia and Albania are exceptions, where authorities have established cooperation with blockchain analytics firms and cryptocurrency exchanges, which has contributed to the seizure of virtual assets. Notably, Serbia’s interior ministry has included a subscription to a blockchain analytics platform in its budget plan, aiming to improve its ability to trace and confiscate illicit crypto assets.³⁷

While the region has limited experience in addressing crypto-related crimes, countries with stronger legal frameworks and established public–private partnerships have been more effective in seizing virtual assets (see Figure 1). However, no cases of accomplished confiscation have been identified so far, highlighting the need for improvement.

The way forward

The Western Balkans could begin to address these vulnerabilities by establishing a clear legal structure for the seizure of crypto assets, including detailed technical procedures for confiscating and managing crime-linked cryptocurrencies. Montenegro’s property management authority recognizes the need for regulatory improvements and suggests that clear asset management procedures for cryptocurrencies should be defined.³⁸ Serbia should also proceed with its planned amendments to virtual asset regulations. These would establish a process for administering seized assets within the justice ministry. Upon receiving a confiscation decision from a prosecutor or court, the justice ministry would transfer digital assets to a secure wallet managed by the interior ministry.³⁹

A senior organized crime expert stressed the need for training programmes for police, prosecutors and judges in digital forensics, blockchain investigations and asset management.⁴⁰ Some progress has already been made in this area. For example, in September 2024, the Balkan Asset Management Interagency Network (BAMIN) — a group of practitioners working on criminal asset management and disposal in the region — trained 24 practitioners from the Western Balkans on the legal frameworks, investigative techniques and practical strategies for seizing and managing digital assets.⁴¹

Enhancing public–private cooperation and regional cooperation is important for enforcement and asset recovery in the Western Balkans. Officials responsible for managing state property and seized assets have pointed out that the lack of coordination in the region reduces the chances of recovering laundered funds through global exchanges.⁴²

Public authorities, blockchain analytics firms and civil society organizations should also strengthen collaboration to facilitate crypto tracing and improve asset recovery efforts. The upcoming Digital Forensics Conference in Belgrade, Serbia, which brings together experts in blockchain forensics and cybercrime investigations, could be a valuable platform for discussing crypto asset seizures.⁴³

Practice in Croatia, a neighbouring country with legal and institutional structures similar to those in the Western Balkans, offers a model for improving crypto asset seizure procedures. A key recommendation is to legally empower the police to issue orders to secure and seize unlawfully obtained crypto assets.⁴⁴ Police should establish dedicated crypto wallets to store seized funds on a case-by-case basis, depending on the suspected offence. A joint directive between the police and prosecution should set out procedures for creating and managing crypto wallets, ensuring that, where legal requirements are met, police officers can securely transfer and store confiscated funds in a police-controlled account.⁴⁵ After the transfer, the police must prepare a detailed report outlining the funds transferred, the destination addresses and the seed phrase (a randomly generated passkey used in account recovery). This report must be sealed and submitted to the relevant public prosecutor, ensuring transparency and accountability in the management of confiscated digital assets.⁴⁶

The International Organization of Securities Commissions, a global standard-setter for securities regulation, has also provided useful policy suggestions for crypto and digital asset markets that can guide policymakers and practitioners in the Western Balkans.⁴⁷ Without reforms, criminals, particularly those using cryptocurrencies for money laundering, fraud and illicit financial flows, will continue exploiting the weaknesses in asset recovery frameworks.

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