The interest in bitcoin in Romania stands out in a region where national currencies are widely seen as poor substitutes for the euro.
Tech-savvy and still deeply distrustful of officialdom 25 years after the end of communism, many Romanians are unfazed by warnings about the cryptocurrency.
In the western town of Oradea, 370 miles (595 km) away from the capital, the first bitcoin exchange in the country has drawn more than 2,000 clients in the seven months since it opened, with transactions totaling 5.12 million lei ($1.57 million).
But Romania ranks as the European Union’s second-poorest state and among the weakest in collecting taxes and fighting fraud, making it poorly equipped to manage the bitcoin.
Bitcoin is still an infant in Europe relative to the United States, where hundreds of start-ups backed by some Wall Street traders and venture capitalists have propelled consumer and media interest. Activity in virtual currencies around Europe is concentrated in London, Amsterdam and Berlin.
Romanian entrepreneurs envision a future where the bitcoin is as common as grocery shopping. But they say it needs a legal framework to gain credibility.
“It is an industry in its early stages,” said George Rotariu, who opened the ATM in Bucharest in collaboration with Vancouver-based Bitcoiniacs and plans to expand to more Romanian cities. “You need a legislative framework to supply services or have a business in this field,” he said.
“We groped around in the legislation and interpreted some policies,” said Horea Vuscan, a local politician who owns the Oradea bitcoin operator BTCXchange.
“We are now in talks with officials because I don’t know where we fit in, a bourse, bank, money transfer firm.”
Bitcoin is stored entirely on computers, not backed by any government or central bank. It lets owners hold, trade and move money from place to place almost as cheaply as sending email.
Its use has raised concerns for governments around the world, especially after Tokyo-based Mt Gox, once the world’s leading bitcoin exchange, filed for bankruptcy after saying some 850,000 bitcoins had gone missing.
A report by Bank of America last year found bitcoin showed promise as a low-cost way to do e-commerce and as an alternative to traditional money transfer services, but could also be used to evade high taxes, capital controls and confiscation.
In July, the European Banking Authority, the EU’s banking watchdog, urged national policymakers to discourage credit and payment institutions from buying, holding, or selling virtual currencies pending a regulatory framework.
“Using bitcoin in Romania is not regulated and carries very large risks,” said the Romanian Financial Supervision Authority (ASF). “The risk of fraud is also not to be ruled out.”