Romania -- Securities Classification Regulatory Overview

Romania, as a member state of the European Union, classifies cryptocurrency tokens as securities primarily by determining whether they meet the definition of "financial instruments" under existing EU financial markets legislation, notably the Markets in Financial Instruments Directive (MiFID II) and the Prospectus Regulation. With the full applicability of the Markets in Crypto-Assets (MiCA) Regulation from late 2024/early 2025, the regulatory landscape for crypto-assets not already considered financial instruments will significantly change, but the classification of security tokens remains linked to traditional securities law.

The Legal Test Used (Howey Test Equivalent)

Romania does not employ a direct equivalent of the U.S. Howey Test. Instead, the core legal test involves determining whether a token meets the definition of a "financial instrument" as set out in Directive 2014/65/EU on markets in financial instruments (MiFID II). This directive has been transposed into Romanian national law, primarily through Law No. 24/2017 regarding issuers of financial instruments and market operations, and subsequent norms issued by the Romanian Financial Supervisory Authority (Autoritatea de Supraveghere Financiară - ASF).

According to MiFID II, financial instruments include, but are not limited to:

• Transferable securities: Shares, bonds, other forms of securitised debt, and any other negotiable securities which confer the right to acquire or dispose of any such transferable securities.
• Money-market instruments.
• Units in collective investment undertakings.
• Options, futures, swaps, forward rate agreements, and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other underlying assets, indices or measures.

The assessment is based on a substance-over-form principle, meaning the economic reality, rights, and obligations conferred by the token are paramount, irrespective of its technical designation or the technology used. If a token grants rights and characteristics equivalent to any of the categories defined as financial instruments, it will be classified as a security.

Which Tokens Are Considered Securities

Tokens that meet the "financial instrument" definition are considered securities. These are often referred to as Security Tokens. Examples include:

• Equity Tokens: Tokens that represent ownership stakes in a company, similar to traditional shares, granting rights such as voting rights, dividend payments, or a claim on the company's assets.
• Debt Tokens: Tokens representing a debt instrument, such as a bond, which may offer interest payments or a claim on repayment of principal.
• Asset-Backed Tokens: Tokens representing fractional ownership in real-world assets (e.g., real estate, art, commodities) or a pool of such assets, where the token confers specific rights or claims against these assets that align with traditional securities.
• Derivatives Tokens: Tokens whose value is derived from an underlying asset, index, or rate, and which fit the characteristics of options, futures, or other derivative contracts under MiFID II.
• Units in Collective Investment Undertakings (Tokenised Funds): Tokens representing units or shares in investment funds.

Tokens NOT considered securities (under existing law, but subject to MiCA):

• Utility Tokens: Tokens designed solely to provide access to a product or service offered by the issuer, without conveying investment rights or expectations. However, if a utility token is marketed with promises of future appreciation or if its primary purpose is speculative investment rather than functional access, it could potentially be reclassified as a security.
• Payment Tokens (Cryptocurrencies): Tokens intended to be used as a medium of exchange (e.g., Bitcoin, Ether), generally not classified as securities unless they grant specific investment-like rights. MiCA will introduce specific regimes for e-money tokens and asset-referenced tokens.

Registration/Exemption Requirements for Token Issuers

If a token is classified as a security, its issuance and offering are subject to the same stringent requirements as traditional securities under EU and Romanian law, primarily the EU Prospectus Regulation (Regulation (EU) 2017/1129).

• Prospectus Requirement: Generally, any offer of securities to the public or admission to trading on a regulated market requires the publication of a prospectus. This prospectus must be approved by the Romanian Financial Supervisory Authority (ASF) or a competent authority in another EU Member State (with passporting rights). The prospectus provides detailed information about the issuer, the securities, and the risks involved.
• Exemptions: The Prospectus Regulation provides several exemptions from the prospectus requirement, which may apply to certain token offerings:
  • Offers addressed solely to qualified investors.
  • Offers addressed to fewer than 150 natural or legal persons per EU Member State, other than qualified investors.
  • Offers with a total consideration in the EU of less than €1,000,000 over a 12-month period.
  • Offers with a total consideration below certain national thresholds (e.g., in Romania, often up to €8,000,000 over 12 months, which may require a simpler "offering document" rather than a full prospectus, depending on national implementation).
  • Admission to trading on a regulated market of securities representing less than 20% of the number of securities already admitted to trading on the same regulated market over a 12-month period.

Even if exempt from a full prospectus, other investor protection, anti-fraud, and marketing rules would still apply.

Secondary Trading Rules

If a crypto token is classified as a security:

• Regulated Markets/MTFs: Secondary trading must generally occur on regulated markets (like the Bucharest Stock Exchange) or multilateral trading facilities (MTFs) or organised trading facilities (OTFs) authorized under MiFID II.
• Investment Firms: Entities providing investment services (e.g., brokerage, portfolio management) related to these security tokens must be licensed by the ASF as MiFID II investment firms.
• Market Abuse Regulation (MAR): Trading in security tokens would be subject to the EU Market Abuse Regulation (Regulation (EU) No 596/2014), prohibiting insider trading, market manipulation, and requiring disclosure of inside information.
• Investor Protection: All MiFID II investor protection rules, including suitability and appropriateness assessments, best execution requirements, and client asset protection, would apply.

Enforcement Examples

Prior to the full applicability of MiCA, specific enforcement actions exclusively targeting crypto tokens as "securities" by the ASF have been limited or not widely publicized in Romania. This is partly due to:

• Novelty: The relatively new nature of crypto-assets meant that national regulators were still interpreting existing laws in this context.
• Focus on Scams/AML: Many enforcement actions in the crypto space across the EU have focused on outright scams, pyramid schemes, money laundering, or unauthorised provision of services rather than specific securities classification issues of legitimate (but unregulated) projects.
• Lack of Clear Guidelines: The absence of comprehensive, specific crypto-asset regulation before MiCA meant a less clear mandate for enforcement on classification.

The ASF has, however, issued general warnings and advisories to the public regarding the high risks associated with investing in crypto-assets, emphasizing that many fall outside traditional financial regulation and thus lack the same protections. These warnings often remind potential investors that unregulated offerings carry significant risks, including the potential for fraud and lack of recourse.

With MiCA's full applicability, the ASF and other national competent authorities will have a much clearer and broader mandate to supervise and enforce regulations related to crypto-assets, including those that are not financial instruments. However, the classification of security tokens will continue to fall under the established securities laws, with the ASF retaining its oversight powers for financial instruments.

Specific Legislation and Regulatory Guidance URLs

• Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114:
  • URL: https://eur-lex.europa.eu/eli/reg/2023/1114/oj
  • Note: While MiCA regulates other crypto-assets, it explicitly states that crypto-assets qualifying as financial instruments under MiFID II remain subject to existing financial services legislation.
• Markets in Financial Instruments Directive (MiFID II) 2014/65/EU:
  • URL: https://eur-lex.europa.eu/eli/dir/2014/65/oj
  • Transposed into Romanian law, e.g., via Law No. 24/2017 regarding issuers of financial instruments and market operations.
• Prospectus Regulation (EU) 2017/1129:
  • URL: https://eur-lex.europa.eu/eli/reg/2017/1129/oj
• Romanian Financial Supervisory Authority (ASF):
  • Website: https://www.asfromania.ro/
  • You would typically search their "Legislation" or "News/Press Releases" sections for specific norms, regulations, or guidance related to financial instruments or warnings about crypto-assets.

In summary, Romania's approach to classifying crypto tokens as securities is integrated within the broader EU framework. The critical determinant is whether the token constitutes a "financial instrument" under MiFID II. If it does, it's treated as a security, triggering comprehensive regulations for issuance, trading, and investor protection, enforced by the ASF. For crypto-assets that do not qualify as financial instruments, MiCA will soon provide a dedicated regulatory framework.