The Balkan Peninsula country, Romania, adopted the Fifth Anti-Money Laundering Directive (5AMLD) of the European Union (EU) as the first regulation it will establish within its territory around cryptocurrencies and other services related to the ecosystem. .
To date, several countries in the European Union (EU) do not have clear standards or legislation established within the framework of the regulation of cryptocurrencies, and the services related to them, such as exchange houses or cryptocurrency custody. However, the EU laid the foundations for possible regulations and new legislation for member states through the so-called Fifth Anti-Money Laundering Directive (5AMLD). Through this regulation, the EU seeks to establish additional measures that allow it to maintain adequate control over the Transactions and movements that are made with cryptoassets, in order to guarantee the transparency and security of users who carry out their financial transactions with these digital assets.
However, as the expert in taxation and technological law explained to us, Cristina Carrascosa during a interview With the Bit2Me team, the Fifth Directive does not come into force until each of the EU member countries adopts it and translates it into their internal legislation. Thus, the EU demanded to Romania, who established the 128 / 2019 against money laundering and illicit activities, considering that it did not comply with the bases established in the 5AMLD and did not adequately transpose the regulations, so the country made the decision to adopt a ordinance recent that complements the 129 / 2019 and helps you avoid sanctions imposed by the EU.
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What is the Fifth Directive – 5AMLD?
La Fifth Anti-Money Laundering Directive (5AMLD) or against money laundering is a regulation established by the European Union approved in 2018 and which came into force in January of this year establishing the minimum guidelines that EU member countries must adopt in their legislation and regulations for the control of money laundering. illicit activities. Although it is not a single law for EU member states, the 5AMLD does establish the necessary bases against money laundering that each of the countries that make up the EU must adapt within their internal regulations.
With Romania's adoption of 5AMLD as its first regulation for the crypto ecosystem, cryptocurrencies, companies that provide financial services, including those of exchanges, Wallets, custody of crypto assets and others will be regulated within the nation; Therefore, they must have the necessary authorization and licenses to offer their products and services within the territory. Likewise, these companies may be subject to trials and sanctions within the Balkan country if they do not comply with the new established regulations.
Implications of the new Law 129/2019 of Romania
Among the modifications and annexes that were made to Law 129/2019 of Romania, the definitions regarding electronic money and virtual currency stand out. According to the ordinance, electronic money is defined as:
“Monetary value stored electronically, including magnetically, that represents a claim on the issuer, issued upon receipt of funds for the purpose of payment transactions and that is accepted by a person other than the issuer of electronic money.”
While the concept of virtual currencies is defined as follows:
“Virtual currency means a digital representation of value that is not issued or guaranteed by a central bank or public authority, is not necessarily linked to a legally established currency and does not have the legal status of currency or money, but is accepted by natural persons. or legal as a medium of exchange and can be transferred, stored and marketed electronically.”
Although it seems that the definitions of electronic money and virtual currency are quite similar, for the purposes of the new law, the classification of the types of money, electronic or virtual, will depend exclusively on the business model and the role played by the currency. within the platform or service. Thus, users who carry out their operations with cryptocurrencies, for example, will be able to classify their transfers as electronic money converted into virtual currencies.
Likewise, in reference to cryptographic service providers, the new law refers to them as:
“An entity that provides secure cryptographic key storage services on behalf of its clients for the holding, storage and transfer of virtual currency.”
Therefore, for the purposes of this law, all those companies or legal entities that wish to provide their services within the country must properly register with the competent authorities and comply with the conditions established to carry out exchange activity in a legal and authorized manner.
Although it seems that the new regulations, not only in Romania, but in general with the Fifth Directive of the European Union, will encourage the introduction of new companies to the cryptographic ecosystem, as they establish regulations for the protection and security of users, in addition to the transparency in all the processes of the ecosystem, the interpretation or adaptation of these directives can also become severe regulations, which, far from attracting more users, companies and investors, will rather dissolve any attempt to integrate into this area.
Now, speaking specifically about Romania, the new law will grant a period of 12 months, which seems quite short, to financial and cryptographic services companies to carry out their due registrations, complying with all established regulations such as KYC, AML, among others. others.
With the new law, providers of these services must comply with the conditions imposed by the country to obtain the licenses required to operate within Romania. For example, if the company is located outside of Romania, then it is obliged to have a legal and authorized representative who resides within the territory and who can carry out the necessary procedures on behalf of the company concerned in all instances, in order to the Commission approves the corresponding authorization. Likewise, for the operation of the digital platforms of the exchanges or custody houses for crypto assets, it is necessary to have a technical authorization, which certifies said platforms as appropriate for the exchange, storage or custody of cryptocurrencies and other digital assets, and that They will resist cyber attacks, guaranteeing security and ownership of the funds.
Finally, in reference to the new regulations based on the Fifth EU Directive, several experts consider that many users are not yet ready or able to comply with all the requirements demanded by the new law, considering that instead of a boom, What can happen is a decline of interests by having to expose oneself again to the intermediations of traditional entities and move away from the concept of what blockchain means and its spirit of decentralization. For its part, the pressure exerted by the Financial Action Task Force (FATF) for countries to adopt the new regulatory standards, it also coerces member states to implement the new directives, which although they are free to interpret, if they do not do so they would face a blacklist, exclusion from investment plans and even sanctions, as in the case from Romania.
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