Introduction
Romania, as a member of the European Union, is steadily building its regulatory framework for cryptocurrencies. Following the EU-wide Markets in Crypto-Assets Regulation (MiCAR), the country is shaping its policies to ensure compliance and protect consumers. This progressive stance reflects Romania’s ambition to establish itself as a regional hub for digital assets, balancing economic growth with financial stability.
While Romania currently lacks dedicated cryptocurrency legislation, existing financial laws apply to digital assets depending on their classification. For example, tokens that qualify as securities or financial instruments are regulated under the Romanian Capital Market Law, ensuring alignment with the EU’s Prospectus Regulation and MiFID II.
Additionally, these efforts are bolstered by the national implementation of EU directives, such as the national adaptation of EU laws like Directive (EU) 2015/849 on anti-money laundering (AMLD5), which extends its scope to Virtual Asset Service Providers (VASPs) under the oversight of FIU Romania.
AML and CFT Compliance Principles
In September, 2024, Romania’s National Office for the Prevention and Control of Money Laundering issued a draft Emergency Ordinance to amend and supplement Law No. 129/2019 on combating money laundering and terrorist financing. This ordinance aims to align national laws with the already mentioned AMLD5 and its updates, including Regulation (EU) 2023/113 concerning transfers of funds and crypto-assets (MiCAR).
The proposed ordinance introduces key changes regarding crypto-assets and revises terminology for consistency and clarity. For instance, the term "digital wallet provider" is replaced with the more streamlined "crypto-asset service provider." This refers to any legal entity providing crypto-asset services professionally and authorized to do so. The updated terminology reflects technological advances and the variety of crypto-related services, ensuring a more adaptive regulatory framework for emerging innovations and enhanced oversight of the cryptocurrency sector.
Additionally, the ordinance proposes a robust regulatory framework for crypto-asset service providers, requiring strict compliance measures. These include enhanced KYC, AML, and CFT protocols, where providers must assess and manage risks associated with transactions involving unverified addresses. They will need to establish detailed risk management policies, procedures, and internal controls.
Obligations for CASPs:
- Proportional Risk Measures:
- Identification & Verification: CASPs must identify and verify the originator and beneficiary of crypto transfers involving undisclosed addresses.
- Additional Information Requests: CASPs are required to gather more details about the source and destination of transferred crypto-assets.
- Enhanced Monitoring: Transactions with potential risks must undergo ongoing scrutiny.
- Single Point of Contact (SPOC):
- Scope: CASPs authorized in other EU member states and operating in Romania under establishment rights must designate a SPOC.
- Responsibilities:
- Monitor anti-money laundering (AML) and counter-terrorist financing (CFT) compliance.
- Facilitate supervision by the National Bank of Romania (NBR) and the Financial Supervision Authority (ASF).
- Provide swift access to documents and data for investigations.
- Cross-Border Relationships:
- Verification of Respondents: Ensure respondent entities outside the EU are authorized and operate legally.
- Detailed Assessments:
- Understand the respondent’s business nature, reputation, and oversight quality.
- Evaluate AML/CFT controls to confirm effectiveness.
- Senior Management Approval: Establishing new correspondent relationships requires top-level consent.
- Responsibility Documentation: Responsibilities of all parties in the correspondent relationship must be clearly defined.
- Customer Identity Verification: Confirm that respondent entities verify their customers’ identities and maintain AML/CFT compliance.
Supervisory Framework:
- Stricter Oversight:
- NBR and ASF will oversee compliance, ensuring adherence to the ordinance’s provisions.
- CASPs will transition from previously lenient operating environments to a compliance-driven model akin to traditional finance.
Repeal of Article 301:
- The ordinance repeals Article 301 of the existing law, removing the Ministry of Finance’s Commission for the Authorization of Foreign Exchange Activity and the Authority for the Digitalization of Romania from the CASP authorization process.
Implementation Timeline:
- The ordinance becomes effective on December 30, 2024.
- Specific provisions, including SPOC designation, internal policy updates, and control mechanisms, take effect by end-January 2025.
This legislation strengthens the regulatory framework, ensuring greater accountability, security, and integration of the crypto-asset sector into the mainstream economy. It also aligns Romania with EU standards, addressing risks tied to money laundering and terrorist financing while fostering a compliant and transparent crypto ecosystem.
Licensing and Supervision of Service Providers
The draft government decision on the authorization of Virtual Asset Service Providers (VASPs) in Romania is still under discussion, with potential amendments anticipated. Key conditions for authorization include:
- Company Formation Requirements:
- The company must be incorporated in accordance with Romanian company law (Law 31/1990).
- It must operate under a specific NACE code.
- Banking and Technical Requirements:
- The company must have at least one bank account in Romania for fiat currency transactions.
- A technical opinion must be obtained from the Authority for Digitization.
- Civil Liability Insurance:
- The initial policy value must be EUR 300,000.
- Starting from the company’s second year of operation, the policy must cover 1% of the total value of virtual and fiat currencies in digital wallets, but not less than EUR 300,000.
- Penalties for Non-Compliance:
- Failure to comply with these provisions may result in fines ranging from RON 10,000 to RON 50,000.
Taxation
Taxes in Romania are overseen by the National Agency for Fiscal Administration. Recently, crypto entrepreneurs have come under increased scrutiny from the relevant authority to ensure compliance with national tax laws. Various crypto-related activities, such as trading, mining, and staking, have seen heightened monitoring, with income from these ventures frequently audited. As a result, it is essential to carefully consider your tax obligations before engaging in any crypto-related economic endeavors in Romania.
Country's taxation regime for cryptocurrency activities provides clear guidelines and rates for various tax obligations. Below are the key tax numbers:
- Corporate Income Tax: 16% for Romanian companies and foreign entities conducting economic activities within Romania.
- Microenterprise Tax: 1%, applicable to small businesses with annual revenue under €500,000 and meeting other criteria.
- Value-Added Tax (VAT):
- Standard rate: 19% for goods and services.
- Capital Gains Tax: 10% individual income tax on crypto gains exceeding 600 RON (€122) annually.
- Withholding Tax:
- Dividends: 8%.
- Exemption: For companies with at least 10% shareholding for over a year.
- Non-resident companies: 16% for income from royalties, interest, and specific services.
Promotion and Testing
In Romania, there are no specific restrictions on promoting or advertising services related to Bitcoin or other utility crypto-assets. These activities fall under the general rules for fair marketing and consumer protection, applicable across all industries regardless of their focus. However, advertising services involving gambling, securities, or investments require prior approval from the relevant authorities and, in some cases, may be entirely prohibited.
Romania has not yet established a regulatory sandbox or similar frameworks to test emerging blockchain and cryptocurrency technologies. However, the Fintech Innovation Hub, coordinated by the National Bank of Romania, serves as a platform for collaboration and dialogue between regulators and fintech companies. Additionally, private initiatives and public-private partnerships support the development of blockchain applications. Romania has also introduced financial incentives to encourage companies active in this innovative field, reflecting its growing commitment to fostering technological progress.
Conclusion
Romania’s evolving cryptocurrency regulation framework positions the country as a promising hub for digital finance in Eastern Europe. The country is actively engaging in the implementation of the Markets in Crypto-Assets Regulation (MiCAR) to align its national regulatory framework with EU standards. This effort aims to create a transparent, secure, and compliant environment for crypto-asset operations, fostering innovation while addressing risks related to money laundering and investor protection. This strategic approach underscores Romania’s potential to lead in the global digital economy while ensuring that consumer protection and financial integrity remain priorities.
If you would be interested in learning more about Romania, and how you can play a bigger role in defining the upcoming rules and regulations, we invite you to connect with us and schedule a complimentary consultation.
