Romania Cryptocurrency Laws Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
On July 18, 2019, the Romanian government enacted Part I, Law No. 129/2019 for preventing and combating money laundering and terrorist financing. The emergency ordinance (“GEO”) requires crypto exchange services and digital wallet providers to register with the government to fight cyber-crimes. The Fifth Anti-Money Laundering and Terrorism Financing Directive (“5AMLD”) applies to all of Europe, including Romania. The 5AMLD’s purpose is to increase transparency in crypto transactions to prevent unethical use of the technology. However, the Romanian government passed the GEO to strengthen the strictness of crypto regulation in Romania. Specifically, the GEO was legislated to advance and improve the 5AMLD’s purpose.
The GEO defines “digital wallet provider” as any “entity that provides services for the secure storage of private cryptographic key services on behalf of its customers, for the holding, storage, and transfer of virtual currency.” Additionally, “reporting entities” include “exchange service providers between virtual currencies and fiat currencies and digital wallet providers.”
The GEO provides for several strict regulations. First, the GEO requires all crypto exchange providers to be directly authorized by the Romanian government to operate within the country. Providers who already qualify under the 5AMLD and are operating in the European markets must jump through Romania’s additional regulations to work within the state. To be authorized in Romania, the exchange provider must apply for verification to prove it is complying with its country of origin’s policies. Additionally, the exchange provider must have a permanent agent in Romania authorized to contract with foreign entities and represent the exchange provider in Romanian court. If a provider fails to follow these guidelines, the company loses access to the Romanian internet, radio, and TV access. Therefore, these European providers must meet double authorization to provide services within the country’s borders.
In Romania, cryptocurrency transactions are subject to income taxes. Gains made from Bitcoin investments are taxed at a 10% rate. Gains generated from buying and selling crypto are categorized as “income from other sources,” thereby subjecting crypto to income taxes. Crypto earnings must be declared in an annual income statement. Revenues are not taxed as income. Gains under $50 are exempt from taxation. However, investors who earn over $150 in crypto earnings are subject to the 10% tax income.
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries: