August 30, 2024 15:49 
Article by Adela Nuță, Baciu Partners
Romania stands on the verge of a legislative reform with an Emergency Ordinance that holds the potential to redefine the legal landscape of crypto-assets and strengthen anti-money laundering measures. In a rapidly evolving financial world, this initiative could be the key to successfully navigating future challenges and setting new standards of compliance in the digital era.
Thus, in response to the growing influence of crypto-assets on financial markets, the national legislation aims to fortify legal measures through an Emergency Ordinance (Ordonanţă de urgenţă privind modificarea şi completarea (onpcsb.ro), proposed by the National Office for Preventing and Combating Money Laundering (ONPCSB), designed to meet recent European requirements and reflect Romania's commitment to balancing financial security with technological innovation.
This legislative initiative, which is in the decision-making procedure until 3rd of September, follows imperative obligations imposed in Romania by European Union regulations established in particular by Regulation(EU) 2023/1113 (known as TFR - Transfer of Funds Regulation) and Regulation (EU) 2023/1114, amending and supplementing Directive (EU) 2015/849 (known as MiCA - Markets in Crypto-Assets Regulation), in the context of the rapid evolution of financial markets and crypto-assets.
A new identity for crypto-assets – this appears to be the central focus of the recently proposed legislative transformations, given the major changes introduced by the draft Emergency Ordinance.
From now on, the terms “providers of exchange services between virtual currencies and fiat currencies” and “providers of digital wallets” are to be replaced with a simpler and more comprehensive term: “crypto-asset service providers.” But it’s not just about rebranding!
The crypto-asset service providers, who have been operating in a legislative quasi-vacuum), will now be subject to much more specific regulation. What will this change mean for them? Essentially, the rules of the game are becoming much stricter, with every step closely monitored by regulatory bodies such as the National Bank of Romania (BNR) and the Financial Supervisory Authority (ASF). Thus, the freedom that crypto-asset service providers have enjoyed until now will be transformed into rigorous compliance, aligned with the strict standards of the conventional financial system.
As part of the new regulations, crypto-asset service providers will also face an additional set of compliance obligations designed to ensure greater transparency and security in digital transactions. These obligations include identifying and assessing the risks associated with transfers of crypto-assets to or from unhosted wallets (also known as "self-custody wallets," i.e., wallets where users directly own and control the private keys needed to access and manage the stored crypto-assets), a crucial aspect in preventing these assets from being used for illicit activities such as money laundering or terrorist financing.
The draft Ordinance also introduces the requirement for crypto-asset service providers authorized in other Member States but operating in Romania to establish a single point of contact in the country. This official representative will play a key role in maintaining smooth and efficient communication with the Romanian authorities, such as the BNR or the ASF, ensuring strict compliance with national legislation, particularly with regard to the prevention of money laundering and terrorist financing. Furthermore, this single point of contact will be responsible for representing the providers' interests before the Romanian authorities, thereby strengthening supervisory mechanisms and protecting the integrity of the national financial system.
Another essential change targeted by the draft Emergency Ordinance is the repeal of Article 301 of Law No. 129/2019, which is one of the key pillars in the regulation of crypto-asset service providers in Romania. This article, although not yet fully implemented, establishes a complex procedure for the authorization of crypto-asset service providers, such as those facilitating the exchange between virtual currencies and fiat currencies or those offering digital wallets.
When we state that the article has not yet been "fully" implemented, we refer to the fact that, although its provisions are embedded in the law, the necessary procedures for the effective execution of these provisions have not yet been finalized or adopted. Specifically, Article 301 of Law No. 129/2019 stipulates that the authorization and registration of crypto-asset service providers should be undertaken by a specialized commission within the Ministry of Finance, in collaboration with the Authority for the Digitalization of Romania and other relevant authorities. However, for this process to be operational, a Government Decision outlining the authorization procedure and the issuance of technical approvals was required, which has not yet occurred.
However, the draft Ordinance intends to completely repeal this article, which, in our opinion, implicitly leads to the elimination of the authorization and registration obligations for resident crypto-asset service providers, without introducing an alternative regulatory/authorization mechanism. If the repeal is adopted, it will create a significant legislative vacuum, leaving the regulation of crypto-asset providers in a state of uncertainty and ambiguity. This situation would not only complicate the supervision and control of the sector but would also contradict anti-money laundering (AML) legislation, which imposes strict compliance and monitoring standards to prevent the use of crypto-assets in illicit activities.
The draft Emergency Ordinance stipulates that the new regulations will enter into force on December 30, 2024, thus aligning with the deadline imposed on Romania for the transposition of the aforementioned relevant European regulations.
It is important to emphasize that, unlike other EU Member States, which may choose to provide a transitional period until July 1, 2026, under Article 143(3) of MiCA, the Romanian authorities appear to have opted not to grant this additional adaptation period for the application of AML regulations concerning crypto-assets. Instead, the draft Ordinance stipulates that the obligations regarding the establishment of a single point of contact for crypto-asset service providers authorized in other Member States will come into force 30 days after the main deadline, i.e., at the end of January 2025.
In a world where crypto-assets are building their profile and popularity in users' digital wallets, Romania is taking up the challenge of keeping pace with European regulations through a draft ordinance that promises to introduce significant changes to the legislation on preventing and combating money laundering (AML). A key question remains whether the new legislation will achieve the right balance between fostering innovation and enforcing strict regulations, or whether it will leave the financial system to grapple with new challenges and legal uncertainties.
