Draft Romanian legislation regulating the cryptocurrency market

The Romanian Government is proposing a draft Government Emergency Ordinance (Draft GEO) to regulate the cryptocurrency market and update Law No. 129/2019 on preventing money laundering and terrorist financing (AML Law). This proposed regulation seeks to align Romania's legal framework with recent EU standards, particularly EU Regulation 2023/1113 on information accompanying transfers of funds and certain crypto-assets (EU Regulation 2023/1113) and EU Regulation 2023/1114 on Markets in Crypto-Assets, which requires stricter tracking of crypto transactions (EU Regulation 2023/1114).

The key highlights of the Draft GEO include:

1. Supervision. Crypto-asset service providers will be subject to the supervision of the Financial Supervisory Authority or the National Bank of Romania.

2. Financial Institution. Crypto-asset service providers will be classified as financial institutions and will have the obligation to comply with the obligations imposed on financial institutions under the AML Law.

3. New Definitions. The term "virtual currency" (in Romanian: monedă virtuală) of the AML Law will be replaced with "crypto-asset" (in Romanian: criptoactiv) and "digital wallet provider" (in Romanian: furnizorul de portofel digital) will be replaced with "crypto-asset service provider." Additionally, the definition of a crypto-asset will be aligned with EU Regulation 2023/1114, referring to a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology. Furthermore, a crypto-asset service provider is defined as a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services.

4. Updates to Existing AML Law. AML Law will be updated to incorporate the new regulations on cryptocurrencies and enhance existing AML measures. Crypto-asset service providers have the obligation to evaluate the risk of money laundering and terrorist financing for transactions involving non-custodial wallet. To address these risks, they must develop and maintain internal policies and procedures, along with effective internal controls.

5. Implementation Timeline. The Draft GEO provides that it will come into effect at the end of this year (i.e., December 30, 2024).