Cryptocurrency, fiat exchange services and digital wallet providers may soon be licensed in Romania. This comes on the heels of the Ministry of Finance publishing a draft government resolution that seeks to establish the legal framework for authorizing and operating these service providers.
With its adoption expected since October 2020, the new legislative instrument is crucial, given that legal entities (both Romanian and foreign) providing exchange services between cryptocurrencies, fiat currencies and digital wallets in Romania are currently operating in a state of uncertainty.
Moreover, this new legislative framework will allow the authorities with supervisory powers to intervene and thus provide additional protection to Romanian consumers who use these services.
Who will be affected by the new provisions?
Depending on the government’s decision, Romanian legal entities that provide cryptocurrency and fiat exchange services or offer digital wallets to customers will be able to obtain the necessary authorization to operate in these areas. For foreign legal entities authorized in another member state that intend to provide such services in Romania, the draft provides a simplified registration procedure, based in part on the authorization already obtained in the home country.
All concerned persons will be given a period of 12 months after the entry into force of the Government’s decision to obtain the authorization issued by the Foreign Exchange Licensing Committee of the Ministry of Finance (the “Committee”).
License terms and conditions
Romanian legal entities will be required to have the CAEN 6499 code as the subject of their activity – other financial intermediation And obtaining the technical approval issued by the Digitization Authority of Romania for the digital platform used. Those in charge of these companies will need to have the necessary knowledge about money laundering and terrorist financing prevention, as well as a good professional and ethical reputation.
Foreign legal entities will be required to have an authorized representative in their home country or registered office in Romania, a security accident insurance policy in the amount of 1% of the previous year’s transaction value (minimum €100,000), and to show some information in Romanian on their website.
The draft resolution does not specify a minimum or maximum period for the Authority to issue or reject authorization. Once the authorization is obtained, it will be valid for two years for Romanian legal entities. For foreign legal entities, the validity period of the authorization obtained in the country of origin will apply. Service Providers will not be able to provide these services until after the KYC process has been completed.
The draft resolution also stipulates cases in which a service provider’s activity may be suspended or prohibited and outlines what actions constitute infractions, with penalties of up to RM50,000.
What then?
The draft government decision was posted on the Finance Ministry’s website for public consultation on May 12, 2023. The draft will follow the normal legislative process and will likely enter into force in a few months or a year.
It remains to be seen whether the authorization procedures will suffer any significant changes in the final form of the government’s decision and how the authorization terms and other obligations imposed on service providers by the competent authorities will be implemented.
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