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Romanian Central Bank Official Says Crypto Will Not Fulfil Basic Roles of Currency

Daniel Daianu, a member of the BNR’s Administration Council, has stated that cryptocurrency will not replace currency issued by central banks

An official from the Romanian central bank has stated that cryptocurrency will not replace currency issued by central banks as it is not necessarily a currency. The news was published by local media outlet Business Review on April 16.

Daniel Daianu, a member of the Romanian National Bank (BNR)’s Administration Council, reportedly stressed the necessity to be aware of the difference between institutions and their roles, ensuring that those roles will not disappear. Daianu also addressed the importance of making the distinction between blockchain technology and digital currencies. Daianu said:

“In my opinion, these are financial assets, not cryptocurrencies, and they won’t be able to fulfil the basic roles of currency. […] Cryptocurrencies will never be able to substitute the currency issued by a central bank. What can happen is for central banks to have a digital currency, but that will also be issued by the bank, and commercial banks will receive digital currency that can multiply. I do agree, however, that new technologies lead to disintermediation and this feature of decentralization shows us the merits of networks.”

Romania — which became the first Eastern European chapter affiliate of American nonprofit corporation Bitcoin Foundation back in 2014 — released a draft Emergency Ordinance that regulates the issuance of electronic money (e-money) last July.

The draft reportedly described electronic money as “monetary value stored electronically, including magnetic, representing a claim on the issuer issued on receipt of funds for the purpose of performing payment transactions and which is accepted by a person other than the issuer of electronic money.”

A recent report from the World Economic Forum (WEF) revealed that at least 40 central banks globally are conducting research projects and pilots with blockchain technology that aim to address such issues as financial inclusion, payments efficiency and cybersecurity. The WEF provided ten use cases for distributed ledger technology аt central banks including the development of retail central bank currency, among others.

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Report: CEO of Largest Romanian Crypto Exchange Arrested on US Warrant

The CEO of Romanian crypto exchange Coinflux was reportedly arrested for alleged fraudulent activity.

The CEO of Romania’s largest crypto exchange Coinflux was reportedly arrested on a warrant from the United States for fraud, organized crime, and money laundering, local news outlet Mediafax reported Dec. 13. Coinflux has subsequently stopped all digital currency exchanges.

Founded in 2015 in the Romanian city of Cluj, Coinflux is an online digital currency trading platform, with reportedly more than 200 million euro worth of Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP) in transactions.

Vlad Nistor, the CEO and founder of Coinflux, was supposedly arrested on the territory of Romania upon the request of U.S. prosecutors. Nistor is accused of alleged fraudulent activity, organized crime and money laundering. The issue of extradition of Nistor to the U.S. will reportedly be heard by the Appeals Court of Bucharest.

Following the purported arrest, Coinflux published an announcement saying that the exchange has temporarily suspended all digital currency exchanges, while the company’s bank accounts have been frozen. Coinflux states that the ongoing investigation has also restricted its access to some parts of the platform.

In July of 2018,  the Ministry of Finance of Romania released a draft Emergency Ordinance, which regulates the issuance of electronic money (e-money). Per the document, any legal entity looking to issue e-money must have a share capital of no less than €350,000 ($395,000), while its members are subject of approval by the Romanian National Bank (BNR).

While the first Bitcoin automated teller machine (ATM) in the country appeared back in 2014, it took Romanian authorities about three years to come up with an expanded comment on cryptocurrencies. In 2017, Ilan Laufer, Romania’s Business, Commerce and Entrepreneurship Environment Minister, expressed his belief in cryptocurrencies, but pinpointed that the area should be officially regulated.

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Romania Releases Draft Bill Regulating the Issuance of Digital Currency

The Ministry of Finance of Romania has released a draft Emergency Ordinance, which regulates the issuance of electronic money (e-money), Business Review reported July 5.

The draft reportedly describes electronic money as “monetary value stored electronically, including magnetic, representing a claim on the issuer issued on receipt of funds for the purpose of performing payment transactions and which is accepted by a person other than the issuer of electronic money.” According to the document, any legal entity looking to issue e-money must have a share capital of no less than €350,000 ($409,000), while its members are subject of approval by the Romanian National Bank (BNR).

The document specifies the categories of entities eligible to issuance of e-money, listing credit institutions, electronic money institutions, the European Central Bank, and the national central banks. To be approved by the BNR, entities should develop a formal framework to manage the carefully designed e-money issuance activity. The authorization will reportedly be valid for 12 months from the date of issue, and cancelled if an entity does not start issuance of e-money within this period.

Upon commencement of issuance activity, companies will reportedly be obliged to provide annual audit reports and submit the accounts to the BNR, which will also act as the oversight body. Unauthorized issuance of e-money is reportedly considered a crime, and is punishable by imprisonment from 6 months to 3 years or by fine.

Though Bitcoin ATMs appeared in Romania in early 2014, the country’s Business, Commerce and Entrepreneurship Environment Minister Ilan Laufer expressed his belief in digital currencies in 2017, also saying that the space should be regulated:

“It’s a challenge for the banking system because this area isn’t very well regulated and I believe that this should happen. It’s an area in which lots of money circulates, but it is also a new technology.”

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Romania Drafts Bill to Regulate Cryptocurrencies

Romania has drafted an emergency ordinance for ICO issuers, a local news outlet reported Thursday.

The draft, which was released by the Romanian Ministry of Finance, states that groups hoping to launch token sales must have their tax and legal records verified. Following that, each member of the issuing organization is required to be approved by the Romanian National Bank (BNR), according to Business Review.

If approved, the draft would make BNR the sole authority over token sales in the country.

BNR claims it would grant authorization to firms when it finds the applicants have “a formal framework for the management of the carefully designed electronic money issuance activity.”

This framework must include a structure with “well-defined, transparent and coherent responsibility lines,” efficient risk-management processes and “adequate internal control mechanisms” for issuing tokens, officials have reportedly outlined.

The draft ordinance also defines cryptocurrency. It explains that the government sees it as “monetary value stored electronically, including magnetic, representing a claim on the issuer issued on receipt of funds for the purpose of performing payment transactions and which is accepted by a person other than the issuer of electronic money.”

Once in effect, the authorization will only last for a 12-month period. If the approved issuers don’t issue the cryptocurrency before the deadline, they will lose the authorization.

The issuers are also required to perform annual audits and submit their activities of accounts to the BNR. Any unauthorized issue of cryptocurrency is considered as” a crime” and the issuers will be punished with an imprisonment between 6 months and 3 years or by fines.

Romania flag image via Shutterstock

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Romania's Oldest Bitcoin Exchange Is Shutting Down Next Week

Romania’s BTCxChange announced it was closing its platform earlier this week.

In a notice dated April 22, the nation’s oldest cryptocurrency exchange told its customers to withdraw all of their remaining funds from the platform, which had already suspended most of its operations – including the ability to trade between cryptocurrencies and fiat currencies like the Romanian leu – earlier this year.

The notice said:

“We inform you that starting from 1st of May 2018, our platform will be closed. Operations stopped back on 1st of February but you still could stock your bitcoins on our platform.”

Earlier this year, the exchange’s chief executive, Max Nicula, said the startup’s bank accounts had been shut down, and it would no longer able able to process fiat trades, Cryptoninjas reported.

This marks the third time the exchange has said that it would close. In September 2016, the company announced it would possibly be sold, and prepared for a closure at the time. At the time, the startup’s owner, Horea Vuscan, said he wanted to retire, and placed the exchange up for sale, as previously reported.

Before then, the exchange asked its users to withdraw all their funds after its team lost access to their servers in September 2014, less than a year after it first opened.

Romanian leu and bitcoin image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.