1. Government attitude and definition


From a social point of view, in Romania, cryptocurrencies and blockchain have experienced a structured evolution in three stages: innovation (genesis); phenomenon (“FOMO”, or fear of missing out); and social reality. After initially appearing as an innovation and quickly becoming a social phenomenon, they now represent a social reality that is impossible to dispute (they exist, and they are valuable).

Despite retaliation and lack of regulation, the technological evolution could not be stopped, and the new emerging technologies quickly became a means of investment, a conventional payment method, a decentralised alternative to the financial banking system, a scalable solution to various social problems and even a mechanism for marketing and promotion.

These new emerging technologies have simultaneously succeeded in both innovating through native functionality and transforming traditional industries. Furthermore, we have witnessed the creation of a whole new industry based on distributed ledger technology (“DLT”), which has proven capable of providing innovative solutions that have forced traditional industries to find solutions to integrate these technologies.

When it comes to the supervision and regulation of personal and professional activities related to blockchain and cryptocurrencies, Romania continues to take promising steps. In particular, the Romanian Government tends to have a positive attitude towards their potential benefits, as demonstrated by its attempts to understand the workflows and refraining from blanket bans on activities related to this industry.

It should be noted that the Romanian legislative body, as far as the regulation of blockchain and cryptocurrencies is concerned, mainly follows the legal regime and guidelines issued by the EU. Therefore, our analysis will focus first on the relevant direction taken by the EU, as well as the implicit or explicit adherence of the Romanian Government to this acquis, and then outline the elements that can be considered specific to the national position.

Although the blockchain-based Web3 space witnessed significant disturbances throughout 2022–2023 caused by the collapse of several massive projects, it also benefitted from major new applications and research intended to increase the value and confidence placed in the industry. These developments, which clearly show that the market is maturing, could not have been overlooked by the legislators in charge, who should be congratulated for recording the busiest year to date in terms of the adoption of important cryptoasset-related legislation (i.e., the Digital Operational Resilience Act, the regulation on a pilot regime for DLT-based market infrastructures (“DLT Pilot Regime”), the Markets in Crypto-Assets (“MiCA”) Regulation, etc.). Most importantly, when looking at the recent legislative changes, regardless of the overall level of implementation, the outlook of officials in relation to cryptoassets can be considered favourable, as discussed in more detail below.

Romania contributes to the InvestEU Programme, and implicitly to the Strategic Technologies for Europe Platform, which continues to support the EU’s position as a world-recognised pioneer, inter alia, in the field of blockchain technology. Romania also adhered to the Digital Decade 2030 policy programme, thus being added to the list of multi-country projects that aim to take advantage of future blockchain-based applications.

As stated when implementing Horizon Europe, “[a] new global wave of breakthrough innovation is coming, one that will be based on more ‘deep-tech’ technologies such as block-chain […].  Europe must ride that wave […]”.[i] Accordingly, the European High Performance Computing Joint Undertaking, of which Romania is a member, provides that “the Union should provide an opportunity for its supply industry to leverage on […] large-scale and emerging application fields such as […] blockchain technologies”.[ii]

At the same time, the Romanian Government’s efforts aim to tackle climate change and environmental protection in a comprehensive way by exploring the benefits of blockchain technology, as envisioned by the EU Green Deal.[iii]

Adequate national and European funding will therefore be made available to actors involved in experimental development and industrial research related to Web3. Activities of this type will be encouraged and supported in Romania, especially since they are seen as an alternative means of financing small and medium-sized enterprises (“SMEs”), as well as providing additional opportunities to consumers, and as key elements of future financial services.

Moreover, while blockchain innovations have been granted with a 100% coefficient of financial aid in accordance with the Recovery and Resilience Facility, Romania looks forward to operationalising important official pilot programmes such as the European NFT Platform, a space for the Metaverse or the embedded supervision of decentralised financial institutions and activities.

We may also assert that it is expected for Romania to be significantly involved in the EU Blockchain Observatory and Forum, as well in the Connecting Europe Facility, and thus to expand its relevant institutions’ knowledge of the cryptocurrency market within an inclusive paradigm.

As regards the measures taken by the Romanian Government in the field of cryptocurrency, we firstly refer to the specific programmes for 2021–2026 for the financing of perfection and requalification of employees, as well as the digitalisation of SMEs. It is worth noting that, in Romania, the professions of blockchain architect and developer were officially recognised as early as 2011.

The Romanian legislature has expressed reservations in 2018 about funding other centres for blockchain research, citing a disproportionate burden on the budget. Nevertheless, the rapid adoption of cryptoassets (there are now more than 2 million crypto holders registered in Romania, or 10% of the population) has led the National Bank of Romania to create and host a Fintech Innovation Hub, and since 2022, a specialised department has been established within the Ministry of the Interior to support initiatives related to the use of new technologies and digital solutions, including blockchain.

Furthermore, as promised by the current Government as part of its 2023–2024 Executive Programme, accelerating digital transformation is the benchmark for defining Romania’s new development model. Blockchain, in particular, is intended to occupy a central position among the technologies that are considered as such.

As a relevant example of this approach, the first public project related to these new emerging technologies was announced in Q3 2022 by the National Post Office, which plans to launch a collection of non-fungible token (“NFT”) stamps to commemorate its 160th anniversary.

On a different note, not all elements of the cryptocurrency industry are seen as offering both disruptive and unharmful uses of technology. As a result, the Romanian Government has set out to prevent the malicious practices that could be associated with these advanced digital novelties, such as money laundering, organised crime or, more recently, the circumvention of war-related economic sanctions imposed against Russia.

The Romanian Government first decided to secure the national interest by regulating such new emerging technologies in the most sensitive areas, including from the tax, anti-money laundering/know-your-customer (“AML/KYC”) and criminal law perspectives.

In this context, the Romanian Government has adopted Emergency Ordinance (“GEO”) No. 111/2020 in view of completing and amending Law No. 129/2019 for preventing and combatting money laundering and terrorist financing. The purpose of the GEO is to strengthen crypto regulation in Romania in view of AML policies (please see “Money transmission laws and anti-money laundering requirements” below).

According to the GEO, the provision of crypto-to-fiat exchange, as well as digital wallet services, should be subject to authorisation and/or registration by the Commission for the authorisation of foreign exchange activity within the Ministry of Public Finance as well as obtaining technical approval from the Romanian Digitization Authority. Although a draft decision was published by the Government in May 2022, at the time of writing, the provisions regulating the activities of providers of exchange services between virtual and fiduciary currencies and providers of digital wallets are still not fully enforceable due to the lack of adoption of implementing regulations.

However, if and when this government decision becomes applicable, providers of virtual currency exchange services and digital wallet services already operating in the European markets and fulfilling the requirements of the fifth Anti-Money Laundering Directive (“AMLD5”) will not be exempted from the Romanian authorisation procedure if they intend to expand their activity in this country. Thus, in order to operate legally in Romania, all such providers will be required to obtain a licence from the Romanian Digitization Authority.

Cryptocurrencies are not considered legal tender either in Romania or at the EU level. The EU envisions the issuance of a digital Euro but states that it should not be seen as a proper cryptocurrency. Nevertheless, pursuant to the MiCA Regulation, which will be directly applicable in Romania and is supported by the Romanian legislator, stablecoins can be seen as equivalent to electronic money.[iv]


2. Cryptocurrency regulation


Essentially, the relationship between blockchain and cryptocurrencies should be seen as a whole-part relationship (blockchain representing the innovation, and cryptocurrencies standing as just one of the applications of DLT) and the two notions are therefore worth analysing together: blockchain being “the vehicle” and crypto its “nuclear engine” to success. Therefore, while cryptocurrencies could not exist without blockchain, the latter could have not become the subject of our analysis without the notoriety acquired by cryptocurrencies. Thus, our analysis will cover both as a whole and touch upon the specific particularities of each of them.

In our opinion, regulating a technology can block its development and directly limit developers’ innovation. Unfortunately, strict regulations may lead to existing and future use cases or blockchain infrastructures that have not been discovered being classified as illegal or non-compliant products.

It should also be noted that cryptocurrencies are not prohibited in Romania, nor are they prohibited in any particular way. Given that the national legal framework is aligned with the EU Digital Finance Package (for the reasons explained in “Government attitude and definition” above), at least until the legal acts comprising it enter into force, Romania can be considered to lack a fully enforceable regulation of crypto-related activities.

In the meantime, specialised practitioners (lawyers, accountants, tax consultants, and experts) have been forced to identify similar concepts in the national legislation and to adapt traditional institutions to these new technologies.

In this context, it is worth assessing the state’s concern about the extent to which the decentralisation of key activities (e.g., financial and banking operations) threatens the Government’s control, which could lead to the enactment of repressive regulation towards centralisation (for example, a ban on using exchanges or wallet providers that are not authorised or do not carry out AML/KYC verifications is still at the project stage at government level).

However, the Web3 market raises completely different organisational principles and therefore complex issues for the regulator, with specific characteristics related to elements such as: (i) technical means of deployment; (ii) storage; (iii) testing; (iv) restriction; (v) traceability; (vi) governance; (vii) reversibility; (viii) originality; (ix) identity; or (x) monitoring. As stated by SEC Commissioner Caroline Crenshaw, issues of lack of transparency, pseudo-anonymity and compliance with fundamental market rules in the decentralised finance space are driving unprecedented complexity in the legislative process.

Apart from the EU acquis, Romania has nevertheless managed to adopt isolated provisions in its national legislation in the following key areas:

  • fiscal aspects applicable exclusively to individuals, such as taxation of income generated by individuals from crypto-related activities;
  • security aspects regarding the prevention of money laundering and combatting the financing of terrorism, namely a series of rules and restrictions applicable to the providers of exchange services (exchanges) and cryptocurrency storage service providers (wallets). Even though such regulation has already been enacted in Romania, it is not currently in force due to the lack of secondary legislation – the adoption of which suspends the primary legislation’s effects by 12 months; and
  • aspects in connection with criminal law, i.e.: (i) qualification of digital currencies as non-cash payment instruments; (ii) extending the scope of criminalisation of certain offences to include crypto-related activities; and (iii) criminalising the possession of cryptocurrencies resulting from criminal offences.

Conversely, the lack of explicit regulation so far would point to a number of important features that these new emerging technologies offer and that have not yet been thoroughly explored in Romania, such as: (i) security token offerings; (ii) tokenisation (either full or fragmented) of valuable goods (real estate, art, precious metals and diamonds industry); (iii) payment processing and lending (financial banking industry); or (iv) administration of cryptocurrencies (brokerage and asset management industry).

Transactions with virtual currencies (cryptocurrencies) were regulated for the first time in 2019 under Law No. 30/2019, which introduced provisions in the Romanian Tax Code regarding the taxation of income thus obtained. Also, since 2019, the Romanian Criminal Code has classified digital currencies as a “means of payment without cash”. The only purpose of this latter classification is to sanction crimes such as theft or embezzlement committed in connection with cryptocurrencies.

We may also assert that there are voices within the crypto space, referred to as “veterans”, including individuals, legal entities and associative companies, who are calling for a more permissive regulation of the activity as a whole and more energetic public solutions to the outstanding problems (e.g., the fight against fraud, and the adoption by central banks of coherent supporting policies aimed at creating a link between cryptocurrencies and traditional currencies).

It is interesting to note that the lack of a dedicated regulatory framework in Romania has so far not been a major drawback for entrepreneurs running companies that deal with cryptoassets. In addition, major legislation, which will come into force in Q4 2023 and 2024, is expected to promote a level playing field for innovation, growth and competitiveness, both in the European single market and globally.

Also, according to the National Bank of Romania, the manifestation of risks specific to the holding and trading of virtual currencies and the significant price volatility of some traded virtual currencies do not currently pose a threat to financial stability in Romania.



3. Sales regulation


Buying and selling crypto

At the time of writing, buying, holding and selling Bitcoin or any other token generally referred to as a utility token is not restricted in Romania. As with any purchase of commodities, AML/KYC and tax rules must be complied with.

However, issuing, buying, storing, or selling security cryptocurrencies are regulated by means of Law No. 126/2018 on financial instruments markets and Law No. 24/2017 on issuers of financial instruments and market operations, which transpose the EU’s second Markets in Financial Instruments Directive (“MiFID II”). As such legislation was not originally designed with the specificities of the Web3 market in mind, the DLT Pilot Regime became applicable on 23 March 2023.[v] Cryptoassets that fall within the scope of the latter regulation must be traded separately from cryptoassets that will be subject to the MiCA Regulation, while exemptions from MiFID II may apply on a case-by-case basis.

With regard to business tax, legal entities may also acquire Bitcoin or utility tokens, inter alia, if these are the subject of their current activity (e.g., exchanges, traders, investment vehicles) or if such digital assets are necessary for the performance of their current activity (e.g., making or accepting payments in crypto, accessing a service or purchasing a product that can be purchased with a specific token/crypto). Any acquisition that is not necessary for the conduct of the business will be construed as non-deductible spending, hence it may be requalified as a personal benefit offered to shareholders or employees in the form of dividends or salary. In this case, the company at hand may be required to collect and pay the corresponding taxes.

Buying and selling with crypto

Crypto payments are being increasingly accepted by major retailers, either directly or through payment gateways to avoid technical implementation, transaction and wallet management issues.

Under the existing legal institutions, cryptoassets are generally qualified as intangible assets. From a technical point of view, a payment in crypto represents an exchange, not a sale agreement, and although no cryptocurrency is considered legal tender, parties may voluntarily accept crypto as an alternative means of payment.

A set of new tax systems, accounting rules and guidelines are being developed by professional organisations as preliminary instructions for the anticipated legislation. In particular, these preparations are meant to aid the constantly increasing number of online stores that accept Bitcoin or other cryptocurrencies, thus creating a safe climate for the shopping experiences of the future.



4. Taxation


Taxation and accounting, in the context of ongoing technological progress, remain advanced discussion topics, causing uncertainty and debates regarding the optimal approaches, even in well-established sectors. According to Romanian legislation, it is assumed that any benefit, whether in physical or digital form (traditional currency, cryptocurrency, services, or commodities like gold or silver), is subject to a tax regime specific to the income category of the taxpayer. Like other industries, revenues from emerging technologies are also taxed in Romania.

Therefore, taxpayers have the responsibility to declare and pay taxes in accordance with the current regulations. Factors such as the nature of the activity (for example, trading versus selling NFTs), the legal structure under which they operate (individual, LLC, sole proprietorship) and the volume of income influence the taxation regime. It is essential to understand that the same operation can have different tax implications depending on individual specifics. In the context of cryptocurrency volatility or large transactions from initial coin offerings (“ICOs”), it is vital to understand the financial dynamics of the business to determine when revenues become taxable. Receiving cryptocurrency as payment for services or goods translates into a revenue-generating activity that must be declared and taxed.

As of 2021, the global shift towards digital economies, driven partly by the COVID-19 pandemic, has amplified the urgency for countries to adapt their taxation and accounting regulations. Digital assets like NFTs and cryptocurrencies are no longer peripheral financial instruments but have started to gain mainstream acceptance. Various countries have been adjusting their regulations to ensure fair tax collection without hindering innovation.

In practice, we have identified major confusion regarding the moment from which fees and taxes are due, namely the approach that tax is due only at the moment when cryptocurrencies are converted into fiat currency. Such outcome is partially valid, and is lawful only if the activity (i) is carried out by an individual, (ii) consists of the trading of cryptocurrencies (“trading”), and (iii) involves an economic cycle that ends with the conversion of cryptocurrencies into fiat currency.

Therefore, in order to determine the proper manner for the taxation of income obtained by individuals from activities that include cryptocurrencies, it is compulsory to determine and acknowledge the economic cycles related to each technical operation. As a general rule, the taxpayer has the obligation to pay tax on the income obtained from cryptocurrencies, namely if the patrimony has increased, regardless of the method (e.g., the person has acquired/received several cryptocurrencies having a higher value than one originally invested or his amount of fiat currency has increased).

Therefore, with respect to trading activity carried out by individuals, taxes and fees are due at the completion of such activity, which often (but not always) overlaps with the exchange of cryptocurrencies into fiat currency. The principle of taxation specifically applies to the value increase obtained following the completion of an activity cycle and does not refer exclusively to conversion into fiat currency.

However, we will consider a completed cycle and therefore the obligation to pay the tax due if, for example, during a six-month period, a person multiplying the number of cryptocurrencies held decided to definitively cease trading activity or decided to buy NFTs with the funds obtained from such activity, without transforming them into fiat.

For the purpose of understanding the scenario whereby an individual is required to pay taxes even if the income obtained is in cryptocurrency and has not been converted into fiat currency, we will assess the example of an individual creating and selling an NFT in exchange for a determined amount of Tether (“USDT”) and subsequently using such funds to acquire tokens to be allocated to the staking process. In this case, we identify two distinct economic cycles generating income; namely, the sale of the NFT and the staking reward. Therefore, the individual will owe tax for the equivalent in Romanian currency (“RON”) of the amount of USDT received for the sale of the NFT and subsequently for the equivalent in RON of the amount of tokens received as a reward from the staking activity.

Furthermore, we consider it worthwhile to assess the case of an individual obtaining cryptocurrencies as a result of the activity of validation (“staking”) by reference to obtaining tokens as a result of a release activity (“airdrop”).

Unlike trading activity, staking or token release activities (airdrop) may be construed as completed at the moment when the taxpayer receives the cryptocurrencies and the obligation to pay the relevant taxes is therefore due.

However, even in this situation, it may be difficult to precisely determine the moment of increase of the taxpayer’s patrimony. Clearly, in cases whereby cryptocurrencies are received in the taxpayer’s digital wallet, the patrimony increases with the value of the cryptocurrencies received, with the obligation to pay the taxes due according to the applicable tax regime.

Furthermore, a distinct analysis arises in the context where the taxpayer is only entitled to receive cryptocurrencies and in turn has the possibility to claim them without effectively doing so. Likewise, debatable approaches also arise in the case of systems that allow options for automated direct allocation of generated cryptocurrencies, without receiving them in the wallet (“compound”). In such case, the applicable tax regime is determined by reference to the income-generating mechanism following an in-depth analysis of the smart contract’s technical infrastructure.

In addition to the foregoing general principles that are applicable accordingly with respect to legal entities, it is important to establish the exact context and technical manner in which revenues are generated.

As mentioned, the Romanian Tax Code only provides trading activity performed by individuals, establishing that taxes are due by individuals at the moment of converting cryptoassets into fiat. Unfortunately, many crypto holders apply this taxation mechanism to all crypto-related revenues, despite the method (“economic cycle”) by which the cryptoassets were obtained and/or generated, such as cryptoassets received as a means of payment for selling a house.

However, there are also scenarios in which trading platforms allow the holding of a wallet in fiat. In such cases, the gain will be deemed to be realised after the transfer made to the wallet available in fiat and must be declared, regardless of whether it is further transferred to the bank account or used to perform other transactions on the platform.

Considering all the above-mentioned information regarding taxable income resulting from crypto-related activities, individuals are bound to declare such earnings by filing the financial statement for natural persons, also known as the “Sole Statement”.

The Sole Statement is a smart PDF in which individuals self-declare the equivalent in national currency of the entire income generated from crypto-related activities, without providing any other information regarding how the cryptoassets were generated. However, additional information regarding all the revenues obtained may be required by the tax authorities, especially when a more than 10% ratio between the expenses and self-declared income is noticed.

It is worth noting that there exists a financial threshold that governs the taxability of these transactions. Specifically, revenues less than RON 200 (approximately EUR 40) for each transaction are exempt from taxation, but with the stipulation that the cumulative annual income must not breach the cap of RON 600 (equivalent to around EUR 120). Additionally, should the aggregate profits derived from alternative revenue streams coincide with or surpass 24 times the gross minimum wage (an estimated EUR 11,000), the taxpayer would incur an additional health insurance contribution, which would amount to around EUR 1,100.

On the other hand, corporate income is subject to the standard income tax applicable to all companies having fiscal residency in Romania. In the case of a small business or microenterprise, the profits will be taxed at a standard flat rate of 1% provided the business maintains at least one full-time employee, together with a dividend tax in the amount of 8% and any applicable social security contributions. A company should be very diligent in maintaining an accurate and proper record of all taxable cryptocurrency transactions (receiving payments in cryptocurrencies, exchanging, etc.).

In conclusion, it is crucial to stay updated on upcoming changes in fiscal policies. As we move past 1 January 2024, predictions indicate significant modifications to the overall fiscal framework. This underscores the continuous need for those involved in the cryptocurrency sector to remain vigilant and adaptable.


5. Money transmission laws and anti-money laundering requirements



At the time of writing, AMLD5 is applicable, which addresses the need to implement legislative measures in order to reduce the risks stemming from the anonymity of transactions performed with virtual currencies. Romania has enacted GEO No. 111/2020, laying down rules on entities involved in cryptocurrency transactions that are thus bound to identify and report suspicious transactions that may breach any provision concerning the AML framework.

GEO No. 111/2020 most notably extends the concept of reporting entities and their scope. It also introduces the obligation to apply standard KYC measures based on a secure identification process.

Pursuant to GEO No. 111/2020, authorised entities (e.g., digital wallet providers, credit institutions, final institutions, gambling service providers, auditors and certified public accountants) become reporting entities in accordance with the AML legislation and have the obligation to report suspect transactions to the National Office for Preventing and Combating Money Laundering. All these provisions and rules are meant to provide effective protection for the beneficiaries of such types of services, as well as for the providers thereof against scams and fraud.

Under the current legal regime, the Romanian Government has planned to issue specific legislation for the authorisation of crypto-to-fiat exchanges and digital wallet providers, as discussed in “Government attitude and definition” above.

On a separate note, after three years of rumours that the National Bank of Romania was unofficially banning cryptocurrencies, it has dismissed all such rumours through a press release. However, it has expressed that the current national and European regulations will allow commercial banks to work with cryptocurrency exchanges and digital wallet providers, provided they apply KYC and risk management measures in the area of AML and terrorist financing.

Furthermore, the Romanian Senate has expressed its official position towards the Proposal for a Regulation of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, by stating that it is in line with the latest amendments of the Financial Action Task Force in the sense of including cryptoasset service providers.

The AML legal framework is expected to be updated during 2024, with the adoption of a new AML Directive and subsequent legislation (AMLD6). In particular, this will create more tailored rules in relation to cryptocurrency exchanges and custodians of cryptoassets and will also provide clearer definitions of offences assimilated to money laundering in the context of cyber and environmental crime.


6. Promotion and testing


In Romania, there is no prohibition on the promoting or advertising of buying or using services related to Bitcoin or any other utility cryptoasset. All regulations related to fair marketing advertisement and consumer protection are applicable to all business industries irrespective of their activity.

However, the advertising of services related to gambling, securities or investments is subject to prior endorsement issued by competent authorities, and there are instances when they may be completely forbidden. Romania has not implemented any sandbox or similar testing programmes in relation to these new emerging technologies.

A Fintech Innovation Hub is currently operational under the coordination of the National Bank of Romania. There are several other private initiatives and partnerships that may involve public support for the development of blockchain applications, and Romania has introduced financial incentives for companies active in this field.

At the EU level, the Commission introduced a so-called European Blockchain Regulatory Sandbox on 14 February 2023, which establishes a pan-European framework for regulatory dialogues to increase legal certainty for innovative blockchain solutions. Furthermore, at the end of Q1 2023, the EU DLT Pilot Regime entered into force, which applies to tokens that represent financial instruments. This legislative act creates a sui generis sandbox regulation based on which the relevant EU authorities, including the European Commission, shall draw periodic conclusions for further amendment of the dedicated legal framework.

More than 15 new activities based on new emerging technologies have also been established by private service providers in Romania, including: (i) ICOs; (ii) initial exchange offerings; (iii) cryptocurrencies that have 1:1 parity with fiduciary coins (stablecoins); (iv) exchange services between cryptocurrencies (crypto exchanges); (v) exchange services between cryptocurrencies and fiat currency; (vi) cryptocurrency storage services (crypto wallets); (vii) services for monitoring transactions/payments with cryptocurrencies (tracking tools); (viii) transaction validation activities (mining farms); (ix) liquidity assurance services (farming pools/landing platforms); (x) e-commerce services (marketplace); (xi) cryptocurrency payment/receipt services (transaction/payment processors); (xii) online games (crypto games); (xiii) NFT generation services; (xiv) secure telecommunications services; and (xv) governance system decentralisation services.

Traditional industries have not remained passive, either, and have begun to adapt their activities in such a way as to integrate the functionalities of the new emerging technologies for: (i) accepting payments in cryptocurrencies (retail and automobile industries); (ii) organising databases to create transparency and immutability (IT industry); (iii) cryptocurrency fundraising and democratisation of investments (small amounts from a large number of investors – crowdfunding industry and private investments); and (iv) using surplus energy to validate transactions in the blockchain (mining – the green energy industry).


7. Ownership and licensing requirements


Taking into account that Romania does not have a specific enforceable regulation dedicated to blockchain-based activities, all crypto owners or service providers are obliged to comply with the general trade rules and, therefore, the obligation to implement additional due diligence to prevent and combat money laundering and terrorist financing. However, there is no restriction on holding or owning Bitcoin or any other utility token.

However, the implementation of activities related to these emerging technologies (mining, farming, validation, staking, exchange, custodian services, etc.) requires a thorough analysis for identifying the correlative obligations. Therefore, although an activity may be physically performed by using the blockchain technology, from a legal perspective, such activity may only be carried out (i) by a certain category of economic operators (card payments, loans, credits, lotto), (ii) after authorisation or licensing (gambling), or (iii) after complying with certain procedures (KYC/AML/PEP check).

In practice, the applicability or purpose of using such technologies can be qualified into four categories, each with a different legal and economic regime:

  1. non-continuous activity (rendered for personal purpose without recurrence), referring to activities carried out (usually) as an individual, which should generate income that may not be qualified as the main source of income;
  2. continuous activities (for business purposes), which involves carrying out a recurring activity that represents the main source of income, usually as an individual;
  3. activities carried out by professionals when providing services for third parties (e.g., trading services or technological support services); and
  4. activities performed solely for marketing and promotional purposes.

Considering the foregoing classification, it may be determined whether a specific activity may be duly performed as an individual or must observe the regulation applicable to legal entities. As per Romanian regulation, recurring trade activities or activities that are performed for professional purposes may only be performed by a legal entity (e.g., limited liability company, joint-stock company, authorised legal person) under a determined NACE code.


8. Mining


Even though no directly applicable legislation has been enacted, it may be strongly argued that mining Bitcoin or other cryptocurrencies is not forbidden in Romania, as any gains stemming from such activities are subject to taxation in accordance with specific provisions under the Romanian Tax Code.

Last year, over 10,000 individuals and legal entities were estimated to perform crypto-mining activities in Romania, and an important exchange platform is proposing to issue “mining certificates”.

Conversely, for a full representation of crypto-mining activity in Romania, we encourage you to look at the Helium miners map (available at https://explorer.helium.com ) and take into account that there are at least 100 times more Bitcoin and Ethereum miners than Helium.

Fortunately, the Romanian authorities have taken into account the current issues concerning crypto-related activities and, consequently, the need to adapt national legislation to a rapidly evolving economic environment. Moreover, it can be argued that the relevant legal framework should become more business-friendly in the future, while also considering the environmental impact and specific objectives in this regard.


9. Border restrictions and declaration


Unlike other jurisdictions, under Romanian regulation, natural persons are not bound to declare the crypto holding or assets expected to be obtained in the following year. However, as stated in the foregoing sections, individuals gaining income from cryptocurrencies (NFTs included) must declare such gains as “income from cryptocurrencies” under the unique financial statement for natural persons. Such statement must be submitted to the tax authorities by 25 May of the year following the year in which the income was generated.

Furthermore, a natural person’s cryptocurrency gain for tax purposes shall be determined as the positive difference between the selling price and the purchase price, by observing any deductible direct costs related to the transaction (e.g., bank fees, exchange trading platform fees). Please note that any acquisition of goods or services based on cryptoassets or with a crypto card (such as a Binance card) shall be construed as an “exit” and the same fiscal regime will thus become applicable.

Given that majority of crypto acquisitions were made between 2015 and 2017, many holders are unable to prove the value of the acquisition in question; therefore, the income generated is usually determined by reference to the amount of fiat received in the bank account, plus the fiat equivalent of the services or goods acquired directly with crypto or using the crypto (Binance) card.

Legal entities must keep audit accounts and declare their holdings (like any other assets) on a monthly, quarterly or annual basis, based on the applicable inventory and tax regime, simply by filling in the relevant accounting forms. Failure to comply with such requirements can be construed as tax evasion.


10. Reporting requirements


According to GEO No. 111/2020, reporting authorities are bound to submit to the Office for Preventing and Combating Money Laundering any transaction exceeding the threshold of EUR 10,000 or transactions that cumulatively exceed such value.

The reporting authorities listed in the “Money transmission laws and anti-money laundering requirements” section above are required to increase the degree and nature of monitoring of the business relationship in order to determine whether such transactions or activities are suspicious. According to the regulations in force, the authorities are bound to report suspicious transactions exclusively to the Office if they acknowledge, suspect or have reasonable grounds to suspect that the assets are subject to criminal offences or are related to terrorist financing.

In a such case, the reporting authorities must immediately submit a suspicious transaction report to the Office before any customer transaction relating to the reported suspicion is carried out. The suspicious transaction will not be authorised until 24 hours after the Office has registered the report. If the Office does not order the suspension of the transaction within the aforementioned period, the reporting authority may carry out the transaction.

In order to evaluate the transaction and conduct the due verifications, the Office may suspend a transaction for up to 48 hours, as a result of information received pursuant to the provisions of the law, as a result of requests from Romanian judicial bodies or foreign institutions with similar functions, or on the basis of other information in its possession.

If the reported suspicion is not confirmed, the Office must decide to end the suspension of the transaction within 48 hours. The decision shall be notified to the reporting entity without delay and shall be implemented immediately.


11. Estate planning and testamentary succession


In the absence of any specific regulation to date, Bitcoin and any other cryptoasset are subject to the regime applicable to any other valuable patrimonial asset that a person may own and transfer to another person either during or after his lifetime. Therefore, all cryptoassets are passed on to heirs (either by virtue of law or by virtue of will) in the same way as any other asset.

In recent years, centralised service providers have started to implement internal procedures for transferring the assets held in a user’s account to the entitled relatives or persons, as previously carried out by banks, brokers or custodians (vaults).

Unfortunately, in the case of decentralised systems (private wallets) where only the owner knows the private key that allows access to the assets, funds are considered lost forever without a backup plan.

However, even in the case of centralised platforms, if there is no specific request from the entitled persons or no emergency contact if the account has been used for a certain period of time, the funds will remain in the custody of the platform forever, much like the funds of those who died in the First and Second World Wars, which are still held in Swiss private banks.

* * *

Acknowledgment

The authors would like to thank Eduardo Neamtu for his contribution to this chapter. Eduardo is a Senior Associate at VD Law Group. A graduate of the University of Bucharest, Eduardo has since gained extensive experience in the legal field, with a focus on high-level arbitration, dispute resolution, real estate and corporate law cases, in which he has achieved outstanding victories.

Eduardo has a passionate focus on the emerging tech and fintech industries and a drive to provide innovative legal solutions for complex transactions. His ability to easily analyse, combine and synthesise large amounts of information from different areas of law is constantly demonstrated and enhanced.

Eduardo is leading the way in the development of a whole range of beneficial use cases for blockchain and cryptocurrencies, their proper in-depth regulation and their understanding by a growing audience.

* * * 

Endnotes

[i]           https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32021D0764

[ii]           https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32021R1173

[iii]         Moreover, as asserted through the last EU budgetary policy, “there is a need to strengthen the links between these communities and policy makers (at Union, national and regional levels), given the strong contribution such innovations can make to key policy priorities such as climate change”, https://publications.europa.eu/resource/cellar/3a6f2e59-b34a-11ed-8912-01aa75ed71a1.0006.03/DOC_1

[iv] https://www.ecb.europa.eu/ecb/educational/explainers/html/digital_euro_central_bank_money.ro.html

[v]          Regulation (EU) No. 2022/858 of the European Parliament and of the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology, and amending Regulations (EU) No. 600/2014 and (EU) No. 909/2014 and Directive 2014/65/EU (Text with EEA relevance).