Cryptocurrency exchanges Romania
The trading of the new form of currency (Cryptocurrency) in Romania and by Romanian companies has until recently been an area where there were many uncertainties and confusion. The increase in interest has been shown as we have been asked…
The trading of the new form of currency (Cryptocurrency) in Romania and by Romanian companies has until recently been an area where there were many uncertainties and confusion. The increase in interest has been shown as we have been asked to examine and advise on the position in Romania both for local companies as well as companies from countries where there are established markets and trading. Romania has gone some way to clarifying the position having transposed into the Romanian legal system the Fifth Money Laundering Directive by virtue of Government Emergency Ordinance no. 111/2020 (“GEO”) which came into force on 15th July 2020.
The GEO amended the Romanian Anti Money Laundering legislation and regulated for the first time the definition of virtual currency and the providers of a digital wallet as well as the providers of exchange services between virtual currencies and “normal” accepted currencies. The adoption of the regulation has been welcomed as allowing an expansion of the use and trading of cryptocurrencies in Romania especially as since 2019 the Romanian Tax Code did provide a new category of taxable income namely the virtual currency transfer income.
According to the GEO in order to provide virtual currency exchange services in Romania, the entities carrying out these services must be registered or authorized by the Romanian National Authorities. The law expressly forbids the carrying out the activities of being a provider of cryptocurrency exchange services as well as a provider of digital wallets without having such authorization. Failure to comply with these obligations is punishable either by a fine or imprisonment. The authorized entities will also become reporting entities in accordance with the Anti Money Laundering legislation and will have the obligation to report any suspect or suspicious transaction to the National Office for Preventing and Combating Money Laundering.
At a first glance, the requirements of the GEO seem to discourage potential Romanian providers of this type of service as it establishes the obligation for them to register and obtain a specific authorization in respect of these services. The authorization is to be granted only if a favorable technical opinion is provided by the Romanian Digitization Authority and paying a tax in respect of such opinion.
In our view, these requirements are favorable for the beneficiaries of the services as they will confer protection against scams and frauds, and in our opinion, they will bring benefits to the providers as well. As investing in cryptocurrencies appears to be an easy method for earning income the number of investors both foreign and Romanians who make or intend to make such transactions is constantly increasing. Many of them have nonetheless been skeptical about investing in cryptocurrency as no protection was offered to them by Romanian legislation. Investors have traded cryptocurrencies on suspicious platforms where the owner or the person who operated them could not be identified and now, they are in the position of having their cryptocurrency accounts frozen and not being able to exchange them to other currencies and cash in the benefits of the investment. This is why we believe that the obligation to register and to obtain the authorization will also benefit the cryptocurrency exchange services providers because as long as they comply with the legal conditions the confidence of the potential investors will increase knowing that they have protection after investing their money in a virtual currency.
