Romania introduces new crypto regulations
Romania released an emergency ordinance to increase government oversight of crypto and blockchain technology.
In an effort to combat cyber crimes, the Romanian government implemented an Emergency Ordinance which requires crypto exchange services and digital wallet providers to register with the government.
Crypto transactions are known for privacy – the encryption provided by blockchain technology allows people a degree of anonymity.
Unfortunately, the government of Romania thinks the crypto sector has become a breeding ground for devious individuals who use the platform for tax evasion, money laundering, and other unlawful behaviour.
As blockchain and crypto are widely unregulated in the EU, member states are left to create their own legislation. The Fifth Anti-Money Laundering and Terrorism Financing Directive, also known as 5AMLD, applies for the whole of Europe, but Romania has taken regulations even further.
In part, 5AMLD is an effort to increase transparency in crypto transactions in order to deter the unethical use of cryptocurrency. It also gives more power to regulators in the crypto sphere.
To add to the existing regulations, the Romanian Government has introduced GEO, or the Emergency Ordinance, the purpose of which is to advance and to improve the 5AMLD agenda.
The GEO requires all crypto exchange providers, which handle the purchase and sales of digital currency to receive direct authorization to operate in Romania.
Service providers that qualify for 5AMLD and are currently operating in the European Economic Area will not be able to operate in Romania unless they go through an additional registration process.
An operator must apply for verification to show it is complying with the policies of its country of origin, and it needs to have a permanent agent in Romania which is authorised to contract with foreign entities and represent these in Romanian courts.
Any providers that do not follow the guidelines will lose their internet, radio, and TV access in Romania.
Driving businesses away
5AMLD and GEO were introduced to repel people with malicious intent.
However, these policies are accidentally doing the opposite. They are causing difficulty to many startups and existing blockchain firms which are struggling to meet these requirements.
In response to 5AMLD, Bottle Pay, a crypto wallet provider commented, “As we are a UK based custodial Bitcoin wallet provider, we will have to comply with the 5AMLD EU regulation coming into effect on January 10, 2020. The amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community”.
In the meantime, while countries like Romania create obstacles for blockchain and crypto firms, countries like Singapore and Sweden are helping the crypto and blockchain industry to grow via fair and transparent legislation.