FinTechs belonging to this category offer financial services using crypto currencies. This category also includes FinTechs utilising blockchain and distributed ledger technologies (DLT) upon which Bitcoin and Ethereum are based, among others. FinTechs develop and do research in this field in order to create new services – e.g. crypto currency exchange markets, wallet providers, NFTs-related services, new payment services, "smart contracts" or new clearing and settling services.
Attitude of the country towards financial services using crypto currencies
The National Bank of Romania (the “NBR”) repeatedly expressed its concerns with respect to virtual currencies (also known as crypto-assets), through official press releases in 2015, 2018 and 2021, emphasising to the public that the virtual currencies are nor national neither foreign currency nor that they do not represent a form of e-money. Furthermore, the NBR stated that it is closely following the evolution of the virtual currencies from the perspective of any possible risks related to the financial system, noting the continuing trend of increasing public interest in such digital assets and draws attention to the fact that, in its opinion, they continue to represent speculative, highly volatile, and extremely risky assets with a high potential to generate financial losses for investors. However, as of April 2021, the NBR concluded that 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 the financial stability in Romania. Representatives of the National Bank of Romania pointed out that there is no initiative at the level of the central bank to adopt the blockchain technologies, as it still has its own reservations.
Obligations and requirements to provide financial services using crypto currencies described above
Virtual currency is not classified as e-money in accordance with the Romanian law provisions and an official statement of the National Bank of Romania and as of the date of this questionnaire, the legal status of the virtual currency is not expressly regulated. Therefore, no license is required under Romanian law for the offering of financial services involving virtual currencies from the capital markets legislation perspective.
Providers of exchange services between virtual currencies and fiat currencies and providers of digital wallets are obliged, as of 15 July 2020, to comply with the provisions of Law no. 129/2019 on preventing and combating money laundering and terrorist financing, including the requirement to be authorised or registered by the Romanian Ministry of Finance, through the Commission for the authorisation of foreign exchange activity. Also, Authority for the Digitalisation of Romania must issue a technical opinion as a requisite for subsequent authorisation, which is available for a fee. However, it should be noted that the entities applying for registration/authorisation have a 12-month timeline for submitting their applications, starting from the enactment of a Romanian Government decision detailing the authorisation–registration procedure and the conditions that an authorised representative must fulfil, decision which has yet to be enacted as of February 2022. Financial services using crypto currencies may also be performed by entities authorised as crypto exchanges in other member states of the EU or in the EEA, based on the passporting provisions.
Additional comments regarding the legal situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area
The regulations of the National Bank of Romania do not contain provisions prohibiting credit institutions from offering account services to virtual and fiat currency exchange service providers and digital wallet providers. Providers of exchange services between virtual currencies and fiat currencies and providers of digital wallets are required to comply with the provisions of Law no. 129/2019, namely to apply KYC and risk management measures in relation to money laundering and terrorist financing and, taking into account the risks they are exposed to as a result of providing payment account services for these entities, to adapt internal risk policies and risk management capacity on an objective and proportionate basis.
Market size for financial services using crypto currencies and biggest companies in this business area
As of April 2021, one of the biggest Romanian crypto currency exchanges and trading platforms, Bitcoin Romania, has reported that there were more than 200,000 customers that were using its services, aiming to cross the 250,000 mark by the end of the year. Another major player in the Romanian crypto currency market, Tradesilvania, estimated that the total traded volume on their platform reached EUR 500 million, with more than 750,000 daily transactions conducted between their 55,000 users. Besides the exchanges and the trading platforms, Romania is home to numerous highly regarded blockchain Start-ups, many of which have reached the global markets. A well-known example is Elrond, a team of developers from Sibiu, Romania, which launched a crypto currency whose market capitalization is of USD 2,7 billion as of February 2022.
Additional comments regarding the economic situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area