Romania had set up its first Bitcoin ATM in 2014, and yet it has been years since the Blockchain and the Cryptocurrency market have been brought under a legal framework. Even though it looked like that the country had shown an early interest in cryptocurrencies, the lack of regulatory framework even after so many years proved otherwise. But, it is expected to change soon as Romania now has a blockchain and crypto regulation framework in place.
Cryptocurrencies are highly encrypted and allow people to transact with anonymity. It has led to the crypto sector to become a breeding ground for criminals. Many of them have continuously been using the platform for tax evasion, money laundering, and other illegal activities. To prevent the use of cryptocurrencies for cyber crimes or money laundering, the Romanian Government has carried out an Emergency Ordinance. According to the new rule, all crypto exchange service providers and digital wallet providers will be required to register themselves and seek prior approval from the Government to be able to continue offering their services.
There is no uniform regulation for Blockchain and crypto currently in the European Union, and all its members are free to set up their own framework. There is a Fifth Anti-Money Laundering and Terrorism Financing Directive, in short, 5AMLD, that applies to entire Europe, but Romania would want to take it a step further. The 5AMLD was created to help bring transparency in crypto transactions to combat the misuse of cryptocurrency. In addition to the current 5AMLD regulation, the Emergency Ordinance introduced by the Romanian Government is set to progress the already set 5AMLD agenda.
The Emergency Ordinance will need all of the crypto exchange providers that handle purchases and selling of different digital currency to have the authorization to be able to function in Romania. Even the providers currently operating in the European Economic Area will not be allowed to operate in Romania till they get a proper registration process as decided in the new directive.
The service provider will need to apply to the authority and verify that they are complying with all the policies in the country where they are based out of. Besides, it also needs a permanent agent to be present in Romania that can get in contracts with foreign companies and are also able to represent them in the court of law. Anyone who does not follow the given guidelines will not have radio, TV, and internet access in Romania.
Even though 5AMLD and GEO were introduced to combat its use for any illegal activities, the new framework might also work as a hindrance for many start-ups to continue their operations. They feel that the new system will make it difficult for them to operate in the country as they are unable to meet all the requirements that are set up by the new rule. Thus, there is a need to look at the rules again and ensure that they do not become a hindrance to the growth of crypto firms and instead help the crypt industry to grow and flourish in the country.