Cryptocurrency, fiat currency exchange services and digital wallet providers could soon become authorised in Romania. This comes on the heels of the Ministry of Finance publishing a draft government decision that seeks to create the legal framework for the authorisation and operation of these service providers.
With adoption expected ever since October 2020, the new legislative instrument is crucial, given that legal entities (whether Romanian or 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 authorities with supervisory powers to intervene and thus create additional protection for Romanian consumers using these services.
Who will be impacted by the new provisions?
Based on the government decision, Romanian legal entities providing cryptocurrency and fiat currency exchange services or offering digital wallets to customers will be able to obtain the necessary authorisation to operate in these areas. For foreign legal entities authorised in another Member State who intend to provide such services in Romania, the draft provides a simplified registration procedure, based in part on the authorisation already obtained in the home state.
All persons concerned will have a 12-month period following the entry into force of the government decision to obtain the authorisation issued by the Foreign Exchange Licensing Commission of the Ministry of Finance (the "Commission").
Conditions for authorisation and validity
Romanian legal entities will be required to have as their object of activity CAEN code 6499 – Other financial intermediation and to obtain technical approval issued by the Authority for the Digitalisation of Romania for the digital platform used. The people in charge of these companies will need to have the necessary knowledge about the prevention of money laundering and terrorist financing, as well as a good professional and moral reputation.
Foreign legal entities will be required to have an authorised representative with its domicile or registered office in Romania, an insurance policy for security incidents in the amount of 1 % of the value of the previous year's transactions (minimum EUR 100,000), and to display certain information in the Romanian language on their website.
The draft decision does not set a minimum or maximum period for the Commission to issue the authorisation or reject it. Once obtained, the authorisation will be valid for two years for Romanian legal entities. For foreign legal entities, the validity period of the authorisation obtained in the home state will apply. Providers will only be able to offer these services when the know-your-customer procedures have been completed.
The draft decision also stipulates cases where a provider's activity may be suspended or prohibited and establishes the actions that constitute contraventions, with penalties of up to RON 50,000.
The draft government decision was published on the website of the Ministry of Finance for public consultation on 12 May 2023. The draft will follow the normal legislative process and will most likely enter into force within a few months or a year
It remains to be seen whether the authorisation procedure will suffer any major changes in the final form of the government decision and how the authorisation conditions and other obligations imposed on providers will be implemented by the competent authorities.
By Veronica Das Alexeev, Senior Attorney at Law ,and Silviu Lazăr, Associate Attoreny at Law, Schoenherr