In an increasingly digitized financial ecosystem, electronic money is an essential component of modern payment infrastructure. Its regulation is vital to protect consumers, ensure financial stability, and prevent risks related to money laundering or terrorist financing.
WHAT IS ELECTRONIC MONEY?
According to the law, electronic money is a monetary value stored electronically, issued in exchange for funds received, which is accepted as a means of payment by persons other than the issuer. Electronic money has a regulated and supervised issuer and is considered a legally recognized payment instrument, unlike cryptocurrencies, which do not have a central issuer, although the technologies may be similar.
REGULATORY CONTEXT
In Romania, the legal framework applicable to the issuance of electronic money is established by:
-Law No. 210/2019 on the issuance of electronic money,
-Regulation No. 5/2019 of the National Bank of Romania on electronic money institutions.
These normative acts transpose into national law the provisions of Directive (EU) 2009/110 on access to the activity of electronic money institutions.
At European level, the activity of issuing electronic money is regulated by Regulation (EU) 2023/1114 on crypto-assets (MiCA), which extends the regulation to digital assets.
WHO CAN ISSUE ELECTRONIC MONEY?
According to the law, electronic money can be issued by:
a) credit institutions, within the meaning of Article 4(1)(1) of Regulation No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012, which operate in accordance with Government Emergency Ordinance No. 99/2006 on credit institutions and capital adequacy;
b) electronic money institutions, within the meaning of Article 4(1)(e);
c) postal service providers issuing electronic money in accordance with the applicable national legislative framework;
d) the European Central Bank and national central banks, when they are not acting as monetary authorities or in any other capacity involving the exercise of public authority;
e) Member States and their regional or local authorities, when they are acting in their capacity as public authorities.
MINIMUM REQUIREMENTS FOR ISSUING ELECTRONIC MONEY
The authorization process imposes strict requirements regarding minimum share capital, management, and own funds, and the documentation must be submitted to the NBR for evaluation.
Any entity intending to issue electronic money in Romania as an electronic money institution must obtain authorisation before commencing this activity.
The National Bank of Romania may only grant authorization to a Romanian legal entity established under Company Law No. 31/1990, which has its actual headquarters in Romania and which issues at least part of the electronic money in Romania.
The National Bank of Romania grants authorization to a Romanian legal entity only if the information and documents accompanying the application show compliance with all the requirements set out in the regulations implementing it and the evaluation of the project presented is favorable.
Electronic money institutions must have, at the date of authorisation, an initial capital of at least the equivalent in lei of EUR 350,000.
Legal entities issuing electronic money must hold professional liability insurance or another comparable guarantee covering, for all territories in which they offer their services, liability for unauthorized payment transactions, for non-execution, defective execution, or delayed execution of payment transactions, or for failure to use strong customer authentication.
PRACTICAL IMPORTANCE FOR ISSUERS AND USERS
For issuers, the practical importance lies in the fact that they must meet prudential conditions, obtain authorisation, and comply with reporting and transparency requirements.
For users, the practical importance lies in the fact that there is a legal framework that aims to protect the interests and stability of institutions that issue electronic money.
It is important for users to check whether the institution is authorized to issue electronic money in accordance with the law/regulation.
The adoption of Regulation (EU) 2023/1114 on crypto-assets (MiCA) will bring new challenges for electronic money issuers, as it establishes a unified framework for digital assets, including so-called “e-money tokens.”
Thus, issuing institutions are expected to have to comply with an extensive set of transparency, governance, and consumer protection requirements.
In conclusion, the Electronic Money Regulation is a pillar of Romania’s digital financial ecosystem.
In a field where technology and law are evolving rapidly, specialized legal advice becomes essential to ensure the success and compliance of any fintech project, as non-compliance can result in administrative sanctions, withdrawal of authorization, or even criminal liability in serious cases.
Our law firm can provide you with information on how to obtain authorizations, compliance and reporting procedures, the relationship between national and European legislation, and many other essential details about the financial and fintech sectors.
For more information, you can contact us at our law firm in Sibiu, str. Spartacus, nr. 13A, jud. Sibiu, by phone at: 0720.291.919 or by email at: [email protected].