1) Please provide a high-level overview of the blockchain market in your jurisdiction. In what business or public sectors are you seeing blockchain or other distributed ledger technologies being adopted? What are the key applications of these technologies in your jurisdiction?
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In Romania, the blockchain market is going through a stage of becoming more matured, with builder using this period of market stagnation to build their web3 products. There have been a surge in public awareness and acceptance of blockchain and cryptocurrency, particularly within the last 3 to 4 years.
As indicated by the 2021 Crypto-Ready Index, Romania leads the pack with a remarkable 331.3% Crypto Searches Annual Increase, reflecting the highest annual growth in online searches related to cryptocurrencies, followed by Greece with 226.0% and Canada with 213.1%.
Blockchain technology is progressively finding its way into the business and startup growth interests. It is also true that in the past year, AI has been the most deep-tecj talked about feature in the tech space in Romania (and the world). Noteworthy industries already integrating blockchain encompass financial industry, retail and automotive sectors, embracing cryptocurrency payments, and the IT industry, employing blockchain for transparent and immutable database management.
On the public sector front, blockchain technology has emerged as a dependable tool widely employed by government authorities across diverse domains. Key sectors benefiting from its application include healthcare, where it enhances data management, and government institutions, where it bolsters transparency. Notably, the Romanian government adopted blockchain technology during the December 2020 parliamentary elections, with the goal of safeguarding electoral process integrity, reinforcing transparency, and ensuring tamper-resistant real-time voter attendance data.
Furthermore, a variety of sectors, including education, transportation, legal, finance, among others, are witnessing the integration of blockchain-based services especially for transparency, notarization and traceability reasons (eg. Diplomas, certificates issued onchain). It is worth noting that Romanian legislation must also adapt to the implementation of the European Directive on Markets in Crypto-assets (the famous MiCA).
MiCA presents an extensive regulatory framework governing crypto asset service providers (CASP) while harmonising the rules governing their authorisation and operation throughout the European Union, including activities conducted within Romania. This regulation was published in the Official Journal of the European Union in June 2023. Titles III and IV will become applicable in June 2024, with the remaining titles (Titles I, II, V, VI, and VII) becoming effective in December 2024.
2) To what extent are tokens and virtual assets in use in your jurisdiction? Please mention any notable success stories or failures of applications of these technologies.
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In Romania, similar to several EU jurisdictions, cryptocurrencies are not provided with the status of legal tender; rather, they are recognised as digital assets ( with variations such as utility tokens, e-money tokens, asset-referenced tokens as defined under MiCA).There is no specific terminology in the Romanian legislation that would create conflicting interpretations with MiCA.
A notable development occurred on April 26, 2023, when the National Institute for Research and Development in Informatics (“ICI Bucharest”) launched the inaugural European institutional platform for the exchange of digital assets. The ICI D|SERVICES platform manages Non-Fungible Tokens (“NFTs”) and functions by harnessing decentralised blockchain and Web3 technologies.
3) To what extent has blockchain technology intersected with ESG (Environment, Social and Governance) outcomes or objectives in your jurisdiction?
To what extent has blockchain technology intersected with ESG (Environment, Social and Governance) outcomes or objectives in your jurisdiction?
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The realm of Environmental, Social, and Governance (ESG) has grown significantly in relevance, obliging businesses to refine their operations to enhance standards and accountability, adhering to prevailing and forthcoming regulations. These regulations include the NFRD (Directive 2014/95/EU), Sustainable Finance Disclosure Regulation (SFDR), Corporate Sustainability Reporting Directive (CSRD), and the Markets in Crypto-Assets Regulation (MiCAR).
While the first three regulations encompass a wide spectrum of environmental, social, and governance criteria for evaluating a company’s sustainability performance and impact, MiCA Regulation aims to streamline the regulation of distributed ledger technology and virtual assets within the European Union. This framework not only protects users and investors but also mandates that crypto asset issuers furnish comprehensive and transparent information about the crypto assets they issue, including their environmental impacts.
For instance, MiCA Regulation tackles environmental concerns linked to cryptocurrencies by compelling companies to disclose their energy consumption. Under the Regulation’s general and direct applicability, the white paper of Romanian legal entities must also disclose the environmental impact of digital assets.1
Viewed from one perspective, the substantial energy consumption associated with blockchain technology contributes to significant greenhouse gas emissions, posing a noteworthy challenge in the context of climate change. For instance, the Bitcoin Energy Consumption Index reached an estimated 77.782 TWh/year in 2021, surpassing Romania’s entire electricity consumption in 2020 by approximately 1.5 times. To gain widespread acceptance, cryptocurrencies must curtail their environmental footprint.2
From an alternative standpoint, blockchain presents an excellent solution for companies seeking to integrate ESG initiatives into their operations and fulfil related reporting obligations. This technology enhances transparency, accountability, and traceability of greenhouse gas emissions, enabling companies to furnish more accurate and reliable carbon emissions data, while concurrently achieving cost savings.
Blockchain’s decentralised verification and its capacity to establish immutable and tamper-proof records ensure data accuracy and trustworthiness. These features enhance the credibility of reported ESG data, aligning with ESG objectives and facilitating the achievement of these goals.3 One notable example that plans to tackle ESG reporting and credit carbon voluntary market is the thezerofund.eu, which had part of its product market ideation in Romania.
Footnotes:
1 https://www.eea.europa.eu/publications/blockchain-and-the-environment
https://thelawreviews.co.uk/title/the-virtual-currency-regulation-review/romania#footnote-015
Why financial firms should reflect tech-related emissions in their ESG reporting (pinsentmasons.com)
EU agrees to deal on landmark MiCA cryptocurrency regulation (cnbc.com)
2 Enerdata, “Romania Energy Report,” (2020)
3 https://www.linkedin.com/pulse/esg-blockchain-transforming-sustainability-reporting/
4) Please outline the principal legislation and the regulators most relevant to the use of blockchain technologies in your jurisdiction. In particular, is there any blockchain-specific legislation or are there any blockchain-specific regulatory frameworks in your jurisdiction, either now or envisaged in the short or mid-term?
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Within the financial sector of Romania, exchange service and digital wallet providers are on the verge of witnessing interesting advancements in the regulatory framework that governs their operations.
The Romanian Ministry of Finance has put forth a draft government decision in 2023 for “approving the procedure for the authorization and/or registration of virtual and fiat currency exchange service providers and of providers of digital wallets, as well as the procedure for granting and withdrawing technical authorization” hereinafter referred to as the “Draft”
The proposed draft government decision holds significant implications for exchange service and digital wallet providers in Romania. The Draft outlines a comprehensive regulatory framework, encompassing authorization procedures, conditions for eligibility, and specific obligations for providers. By establishing strict guidelines for compliance and imposing penalties for non-adherence, the Draft aims to promote transparency, accountability, and security within the financial sector.
Moreover, the Draft’s limitations on certain services and the possibility of revocation of authorization underscore the seriousness of adhering to the prescribed regulations. Once implemented, the Draft is expected to foster a more structured and secure operational landscape for these providers, ultimately benefiting both service providers and their clients in Romania’s financial market. However, on the other side, there are areas that are not clearly delineated by the Draft, namely: (i) date of entry into force; (ii) overlapping with MiCA, which will apply in any case by the end of 2024; (iii) the spinous issue of banking crypto projects is not solved, but rather amplified by this Draft – in order to receive a license, one needs a bank account – in order to receive the bank account, one needs to have a license – thus a chicken and egg dilemma.
Furthermore, relevant to the use of blockchain technologies is the transposition of the Fifth Anti-Money Laundering and Terrorism Financing Directive (“5AMLD”). It is important to note that this directive is implemented through multiple legislative acts, underscoring the comprehensive and multifaceted approach taken to address the associated regulatory challenges.
Firstly, according to Article 5 para. (1), points g and g^1 of Law no. 129/2019 on preventing and combating money laundering and terrorist financing, providers of services of exchange between virtual currencies and fiat currencies, as well as providers of digital wallets are considered entities supervised by the National Office for Preventing and Combating Money Laundering (“O.N.P.C.S.B.”) Therefore, these providers have a legal obligation to report suspicious or unusual transactions and to cooperate with the Office in the performance of its duties.
Secondly, Emergency Ordinance No 53/2022 lays down the obligation for the aforementioned reporting entities, including providers of virtual and fiat currency exchange services and providers of digital wallets, to notify O.N.P.C.S.B., exclusively in electronic format, of the commencement, suspension or cessation of activity, within 15 days from the date of commencement, suspension or cessation of activity. From the perspective of the O.N.P.C.S.B., this measure is intended to make the sector’s size known and to monitor the reporting entities, while from the perspective of the reporting entity, it is intended to be a way for the involved persons to become aware of the importance of their obligations and the risks to which they are exposed.
Thirdly, Government Decision no. 603/2011, amended by Government Decision no. 299/2021, is the regulatory act approving the Rules on the supervision by the O.N.P.C.S.B. of the implementation of international sanctions. It regulates the procedures and responsibilities of the entities involved in the monitoring and enforcement of international sanctions in the context of combating money laundering and terrorist financing, thus ensuring Romania’s compliance with international standards in this area.
Last but not least, the Order of the President of the O.N.P.C.S.B. no. 37/2021 on the approval of the Rules for the application of the provisions of Law no. 129/2019 establishes the framework and specific rules that reporting entities must follow in order to comply with the national legislation in the field of prevention and combating money laundering and terrorist financing terrorism (identification and verification of customers, monitoring of transactions, reporting of cash transactions, reporting of suspicious transactions, etc).
In conclusion, it is essential to recognize the prevailing legislation pertinent to blockchain technology while also remaining vigilant about forthcoming developments. Notably, the Markets in Crypto-Assets Regulation (MiCA) seeks to establish uniform market rules for crypto-assets across the European Union. This regulation was officially gazetted in the EU Official Journal in June 2023 and is scheduled to become fully effective throughout the EU by 30 December 2024.
5) What is the current attitude of the government and of regulators to the use of blockchain technology in your jurisdiction?
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The Romanian government has displayed a favourable stance regarding blockchain technology and cryptocurrencies. They have initiated small steps to oversee and regulate personal and professional engagements linked to these emerging technologies. The government is in the process of understanding the operational aspects and has refrained from prohibiting the commercial activities within the digital asset space.
As previously mentioned, ICI Bucharest introduced ICI D|SERVICES, the first European institutional platform designed for facilitating the development and use of blockchain technology and for trading digital assets.
Furthermore, the National Post Office (partly owned by the state) launched in 2022 the first public project involving a collection of non-fungible token (“NFT”) stamps to commemorate their 160th anniversary. In a more recent development, in May 2023, the National Post Office announced yet another series of NFT post stamps, demonstrating their ongoing engagement with blockchain technology and innovative commemorative approaches.
In another significant milestone for Romania, the 2020 national parliamentary elections marked the debut of blockchain technology in the election sector. The primary objective behind this move was to safeguard the integrity of the electoral process and enhance its transparency. The government was determined to ensure tamper-proof and real-time data regarding voter attendance.
6) Are there any governmental or regulatory initiatives designed to facilitate or encourage the development and use of blockchain technology (for example, a regulatory sandbox or a central bank digital currency initiative)?
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N/A
7) Have there been any recent governmental or regulatory reviews or consultations concerning blockchain technology in your jurisdiction and, if so, what are the key takeaways from these?
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N/A
8) Has any official guidance concerning the use of blockchain technology been published in your jurisdiction?
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National Office for Preventing and Combating Money Laundering created in 2023 the Guide on Suspicion Indicators and Money Laundering Typologies in the Crypto-Assets Domain. It is qualified as the “culmination of their efforts to provide relevant information and practical solutions in preventing and combating money laundering within the realm of crypto-assets”.
Through this guide, O.N.P.C.S.B.`s objective is to enhance awareness and inform financial institutions, regulatory authorities, and all stakeholders involved in this field about the risks and challenges associated with money laundering.
To this date, the market expects that a national champion among Romanian authorities (National Bank of Romania, Ministry of Finance, or the Authority for Surveillance of Financial Markets – ASF) become the national coordination authority for the digital assets guidance and regulatory oversight. In any case, we expect that the authorities will be open to this new space, given the relatively friendly treatment of crowdfunding in the past and the openness to adhere to guidelines and technical standards published from ESMA and EBA in the area of fintech and payments. 4
Footnotes:
4 As for MiCA, ESMA, in cooperation with EBA, shall develop draft implementing technical standards to establish standard forms, formats and templates for the crypto-asset white paper, among other crucial points for the implementation of the Regulation.
9) What is the current approach in your jurisdiction to the treatment of cryptocurrencies for the purposes of financial regulation, anti-money laundering and taxation? In particular, are cryptocurrencies characterised as a currency?
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Concerning anti-money laundering, the Romanian government enacted Law No. 129/2019 to prevent and combat money laundering and the financing of terrorism. This law imposes stringent obligations on financial institutions, which encompass cryptocurrency trading platforms. They are mandated to rigorously verify customer identities and report any suspicious transactions as per the provisions of this legislation.
ASF protects the interests of actors in the financial markets and is responsible for supervising financial products, the information published by companies, and financial service providers, while BNR is responsible for overseeing individual financial institutions (e.g., credit institutions, investment firms, payment institutions, non-banking financial institutions and electronic money institutions) and the proper functioning of the financial system as a whole. ASF relies entirely on the guidelines issued by the European Securities and Markets Authority (ESMA) with respect to the risks inherent in ICOs.
ASF seems to apply the EU principles of transferable security and financial instruments as defined in MiFID II also in the area of tokens that have the characteristics of transferable securities.
Transferable securities are those classes of securities which are negotiable on the capital market such as:
(a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares;
(b) bonds or other forms of securitized debt, including depositary receipts in respect of such securities;
(c) any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures.
As a consequence, depending on their qualities, virtual currencies could be classified as transferable securities, necessitating the publication of a prospectus prior to being offered to the public, and in this particular case – then being outside the scope of MiCA and into the realm of financial regulations.
Regarding the tax aspect, it is indeed a complex subject. Pursuant to the Romanian tax code, any form of value or benefit received by a taxpayer is liable to taxation. Consequently, the taxpayer is obligated to declare and remit taxes corresponding to the income derived from cryptocurrency-related activities.
The tax treatment can vary in Romania, contingent upon the specific tax categories applicable to diverse activities. To obviate any ambiguity in this realmit is essential to determine and understand the activities and transactions undertaken by the taxpayer. For example, concerning trading activities, taxes are applicable on the additional income generated through these operations. For individual tax payers, the moment of converting crypto currencies into fiat is by all measures, a taxable event. However, also in this case, there might be situations where the economic cycle related to the use and trading of cryptocurrencies might lead to a conclusion where the taxable event is triggered by a chain of operations/transactions that result in the exchange of crypto to crypto (including NFT purchase for consumption or investment) as being the taxable event.
Furthermore, it’s noteworthy that cryptocurrency transactions are subject to a 10% income tax rate if the total earnings throughout the financial year exceed 600 lei (approximately EUR 120). These earnings must be disclosed in an annual income statement.
Additionally, should the profit stemming from these activities reach the equivalent of 12 times the minimum gross salary (approximately EUR 5,500), the taxpayer will also be liable for a social security contribution (CASS) amounting to approximately EUR 500.
A different regime applies for micro enterprises which includes a 1% tax on profits. Overall tax regime for dividends from commercial activities is set at 8%.
10) Are there any prohibitions on the use or trading of cryptocurrencies in your jurisdiction?
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There are no prohibitions on the use or exchange of cryptocurrencies in Romania. Similar to many other governments, the Romanian government does not recognise cryptocurrencies as official legal tender.
Nevertheless, transactions involving virtual currencies, including cryptocurrencies, are subject to regulation as per Article 116 para. (1) of Law 227/2015. The aforementioned article designates income from cryptocurrencies as being income from alternative sources. Hence, even though cryptocurrencies aren’t classified as legal tender, they are indeed lawful for possession and trade, and as a consequence for taxation purposes. 5
Not least, the Romanian Criminal laws also apply and protect from theft, embezzlement and fraud. While generally, no distinct crimes were put in place especially for cryptocurrencies, yet the protection granted to movable assets (goods) comprises them, too. Exception to the aforementioned are the Romanian Criminal Code new crimes, introduces as a result of the Directive (EU) 2019/713 of the European Parliament and of the Council of 17 April 2019 on combating fraud and counterfeiting of non-cash means of payment. For example, article 250 para. 1 Romanian Criminal Code that states that carrying out a cash withdrawal operation, uploading or downloading an electronic money instrument or transferring funds, monetary value or virtual currency, by using, without the consent of the holder, a non-cash payment instrument or data identification that allows its use, shall be punished by imprisonment from 2 to 7 years.
Footnotes:
5 Crypto Tax Guide Romania 2023 [Taxe Crypto Romania] | Koinly
8 Best Exchanges To Buy Bitcoin in Romania (2023) (bitrawr.com)
11) To what extent have initial coin offerings taken place in your jurisdiction and what has been the attitude of relevant authorities to ICOs?
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In Romania, Initial Coin Offering (ICO) serves as an important way of financing for entrepreneurs and investors to secure financing swiftly and conveniently. This mechanism facilitates rapid access to funds, rendering it particularly attractive in the private sector, notably for start-ups.
12) If they are permissible in your jurisdiction, what are the key requirements that an entity would need to comply with when launching an ICO?
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Should an ICO amount to a sale of security tokens, then the issuing entity must adhere to the rules outlined in the Prospectus Regulation (PR). These rules require that adequate information be provided when soliciting investments from European Union investors.
However, if the ICO amount to an offering of non-security, non-financial instruments, the rules related to general trade applied, for the sale of future goods or services, an overall encompassing domain where utility tokens where the norm. In this regard, rules applicable to consumer protection in general and offerings from digital platforms apply.
In addition to the aforementioned fundamental prerequisites, the forthcoming MiCA Regulation will significantly impact ICOs. It will introduce provisions concerning white paper, marketing communications, crypto passporting, as well as prohibitions on insider trading and market abuse. While ICOs will remain relatively less regulated than Initial Public Offerings (IPOs), this regulatory framework endeavours to establish legal certainty, encourage responsible practices, and stimulate innovation in the ICO realm, spanning both Romania and the European Union.
13) Is cryptocurrency trading common in your jurisdiction? And what is the attitude of mainstream financial institutions to cryptocurrency trading in your jurisdiction?
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In 2022, a survey conducted among Romanian citizens, focusing on the prevalence and scope of cryptocurrency ownership, shed light on the prevailing sentiment towards cryptocurrencies in the population.
It is noteworthy that a staggering 96% of Romanian adults who have access to the internet and fall within the age bracket of 18 to 55 years are now aware about cryptocurrencies.
Furthermore, among the individuals familiar with cryptocurrencies, approximately 40% have had previous or current holdings of these digital assets, and an additional 80% are contemplating future cryptocurrency acquisitions. It is essential to highlight that those holding cryptocurrencies tend to report monthly incomes exceeding EUR 1,130.6
Regarding the attitude of traditional financial institutions towards cryptocurrency trading, the Romanian National Bank (“BNR”) has issued a cautionary statement. According to the BNR, cryptocurrencies are regarded as speculative assets, characterised by notable volatility and significant risk exposure, which could potentially result in substantial financial losses for investors.
Footnotes:
6 https://nocash.ro/din-10-persoane-care-au-auzit-de-criptomonede-4-detin-sau-au-detinut-criptomonede-iar-8-intentioneaza-sa-cumpere-in-viitor-45-dintre-utilizatorii-de-internet-cu-varsta-cuprinsa-intre-18-55-ani-dor/
https://thepaypers.com/expert-opinion/blockchain-and-crypto-in-romania-learnings-from-banking-40-crypto–1257187
14) Are there any relevant regulatory restrictions or initiatives concerning tokens and virtual assets other than cryptocurrencies (e.g. trading of tangible property represented by cryptographic tokens)?
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In Romania, issuing or acquiring security tokens is strictly forbidden without obtaining the prior approval of the Romanian Financial Supervisory Authority.
As regards to Russian sanctions, crypto-assets are covered by the relevant provisions on the asset freeze and prohibition to make funds or economic resources available to listed persons, namely all transactions prohibited in the EU Regulations on Sanctions are also prohibited if carried out in crypto-assets. 7 As for services (trading, custody wallets or crypto accounts related managed services – these must be halted. In the latter case assets on the accounts and/or in the services should be returned to the Russian customer, or be converted into fiat currency or another asset category that is not subject to sanctions (And which are subject to restrictions on deposits, in any case).
Footnotes:
7 See Council Regulation (EU) No 269/2014 and Council Regulation (EU) No 833/2014.
15) Are there any legal or regulatory issues concerning the transfer of title to or the granting of security over tokens and virtual assets?
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No, Romania has no specific regulations with respect to the transfer of title to or the granting of security over tokens and virtual assets. 8
A more nuanced approach could raise novel issues of transferability, especially in relation to tokenization of assets. A tokenized asset is a digital representation of ownership in a real-world asset on the blockchain. Tokenization of land or real estate in Romania faces legal hurdles, particularly when it comes to the transfer of title. Under current Romanian law, the transfer of title for land or property requires specific formalities, including notarization and registration with the Land Registry. This legal framework does not recognize the transfer of ownership through blockchain tokens, meaning that even if a token representing a piece of real estate is sold or transferred, the actual legal title to the property remains unchanged in the eyes of Romanian law. Hence many projects are tempted to use DAOs (Decentralized Autonomous Organizations) or to link other rights and contractual obligations, or corporate structurings to obtain a somewhat similar effect of “ownership”. Hence, corporate structurings are trying to fill in this gap, through tokenized shares. Additionally, the secondary trade of tokenized shares, where investors trade tokens representing fractional ownership of assets, is not yet addressed in Romanian legislation. This legal ambiguity can create complexities and uncertainties for investors and issuers in the tokenized asset market within Romania. However, we expect this area of asset tokenization to grow in the near future, and customized solutions can be found by structuring tokenization projects within the current legal framework, ensuring compliance, and advocating for legislative updates to accommodate the evolving landscape of tokenized assets.
Footnotes:
8 esma50-157-1384_annex.pdf (europa.eu)
16) How are smart contracts characterised within your legal framework? Are there any enforceability issues specific to the operation of smart contracts which do not arise in the case of traditional legal contracts?
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In Romania, similar to other European Union Member States, the interest in smart contracts and blockchain technology, particularly within the sector of financial transactions, is notable. While there have been a few private initiatives aimed at regulating smart contracts, Romania has not yet implemented specific regulations or legal frameworks tailored to the concept. Importantly, it is important to emphasise that the absence of specific regulations does not imply prohibition nor that smart contracts per se are not binding. Smart contracts are governed by “the rule of code”, however specific circumstances and context may provide the elements to have a smart contract as a contract between parties, which ensures rights and obligations for the participants in a smart contract transaction.
Moreover, there have been no identifiable enforceability issues unique to the operation of smart contracts, and they generally adhere to the same legal principles applicable to traditional contractual agreements. In the absence of specialised regulations, the governing law for smart contracts is ascertained based on general legal principles (and conflict of laws, as the nature of blockchain based transactions and smart contracts embedded herewith is cross border by design).9
Footnotes:
9https://www.lumenpublishing.com/journals/index.php/ejlpa/article/view/4896/3374
17) To what extent are smart contracts in use in your jurisdiction? Please mention any key initiatives concerning the use of smart contracts in your jurisdiction, including any examples relating to decentralised finance protocols.
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Question answered above.
18) Have there been any governmental or regulatory enforcement actions concerning blockchain in your jurisdiction?
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An important regulatory development within the blockchain and digital finance landscape is the adoption of the Pilot DLT Market Infrastructure Regulation (PDMIR) on June 2, 2022. This regulation serves as the inaugural component of the broader Digital Finance Strategy Package, which encompasses the MICA Regulation and various complementary legislative measures, collectively shaping the future of the financial sector. This European Regulation came into force on March 23, 2023.
The PDMIR carries particular relevance for newly emerging crypto platforms seeking to transition or refine their business models. It is specifically designed to facilitate the deepening of understanding by capital markets regulators regarding the integration of Distributed Ledger Technologies (DLTs) into capital market infrastructure. Furthermore, it operates within the framework of MIFID II, governing financial instruments and ensuring compliance with related regulatory requirements.10
Footnotes:
10 https://thelawreviews.co.uk/title/the-virtual-currency-regulation-review/romania#footnote-017
19) Has there been any judicial consideration of blockchain concepts or smart contracting in your jurisdiction?
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In Romanian jurisprudence, references to blockchain technology and smart contracting have been found in court decisions, although the subject matter of the dispute did not directly concern these technologies. This has occurred in light of the significant increase in the relevance of blockchain technology in various economic sectors and, as such, has attracted the attention of the courts – especially tax related matters, contractual issues related to offerings, contractual issues related to managed services for crypto trading and custody. There is no established treatment or terminology arising from case law.
20) Are there any other generally-applicable laws or regulations that may present issues for the use of blockchain technology (such as privacy and data protection law or insolvency law)?
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The aim of blockchain technology is to establish a transparent and immutable database/registry, which can potentially engender conflicts with privacy and data protection laws. In specific scenarios, these laws may necessitate the ability to modify or erase personal data.11
Regulations in this domain hold the potential to substantially enhance security, particularly in endeavours to prevent and combat money laundering, but may present conflicts with specific data protection laws. Hence, we emphasise the significance of vigilant monitoring of forthcoming regulations, especially concerning aspects like Cross-Border Data Transfers and other GDPR requirements, while we acknowledge that GDPR is not particularly suited to deal with web 3.0 projects and data transfers and interactions.
Footnotes:
11 Blockchain: Data Privacy Issues and Mitigation Strategies | Practical Law The Journal | Reuters
21) Are there any other key issues concerning blockchain technology in your jurisdiction that legal practitioners should be aware of?
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The integration of blockchain technology into Romania’s legal landscape raises several legal considerations and opportunities. Due to a lack of regulation, some areas of the blockchain sphere are still unexplored, while others have been forced to adapt to national legislation and its extensive interpretation.
Additionally, blockchain-based activities need clear guidelines for tax obligations – especially for staking activities and VAT tax treatment for ICOs – while the interpretations from the private practice should get at some point reunited.
On the other hand, Romania is a EU jurisdiction that has not explicitly over regulated the sector, and while the principles of free trade apply to any non-forbidden or unregulated activity, Romania could be a good, reasonable fit for new innovative projects related to NFTs, metaverse and DEFI projects as well as hybrid projects that bridge the gap between web 2.0 and web 3.0.
In summary, while blockchain technology itself does not require explicit regulations and interpretations, its practical use and offering to the grand public does. Mainstream adoption requires at least a terminology and guidelines for the implementation of crypto regulations.
Upon the attainment of a well-defined legal framework for emerging technologies, Romania will have the opportunity to be one of the preferred destinations for both investors and entrepreneurs, opening up to the EU market as whole, once MiCA Regulation will take over. Romanian established web3 startups, crypto assets providers and Initial token offerings will benefit from the EU passport under the Regulation.