The Dutch Authority for the Financial Markets (AFM) and De Nederlandsche Bank (DNB) have provided their recommendations for cryptocurrency services.
In response to the Netherlands’ current blockchain and cryptocurrency laws, The AFM and DNB have weighed in with their proposal.
According to the Nederlandse Omroep Stichting (NOS), the proposal is a direct response to the request of Pete Hoekstra, the finance minister, who asked that the two financial authorities develop necessary steps for regulation.
He is expected to introduce the recommendations almost immediately.
What kind of changes can we expect to see?
Firstly, the AFM and DNB want to introduce a licensing regime for fiat-crypto exchange platforms and crypto wallet providers.
This is designed to ensure that the revised European anti-money laundering directive is effectively implemented.
As a result, crypto exchanges and wallet providers will have to monitor, collect and store all customer transactions/data on the platform, plus report any suspicious transactions or behaviour. In the case of an investigation, any required data will be taken directly from the crypto service.
In order for a business to get an operating license, the DNB will first have to monitor their service as a part of a testing period. During this time, the DNB will assess whether the business can successfully collect and store the required data.
The AFM and DNB believe that fraudulent activity directly relating to cryptocurrencies has become “less urgent” since crypto’s popularity in the Netherlands has calmed down in recent months.
In contrast, the new proposal is focused more on stopping “unusual transactions”, since the figure of such cases has drastically risen from 300 to almost 5,000 a year.
The AFM and DNB have also placed importance on amending the European regulatory framework to encourage blockchain-based development of small to medium enterprise (SME) funding.
This involves advocating for the amendment of the European regulatory framework, in order to enable the trading and offering of cryptos that bare similarities to shares or bonds.
Naturally, this should open the door for SMEs to get “corporate funding”.
The new licensing system proposal will also allow authorities to conduct a thorough assessment of all crypto companies before launching.
The Netherlands are following suit
This move from the AFM and DNB follows the recent trend of regulations on the crypto industry around the world, with the European Banking Authority (EBA) publishing a report on the requirement for a set of pan-European crypto regulations.
Further afield, South Africa’s Reserve Bank has also issued a consultation paper based on the need to get crypto companies to register with the government.
However, despite the fact that this move from the Netherland’s financial authorities echoes other governments around the world, the proposed licensing system hasn’t received the support of everyone. For example, the secretary of the Bitcoin Nederland Foundation, Richard Kohl, says that it’ll cause a “competitive disadvantage” for crypto start-ups who plan to establish themselves side-by-side with Dutch banks.
Furthermore, Kohl believes that the extra paperwork and significant fees are a “big step backwards” for the innovation culture in which the Netherlands prides itself on.
What are your thoughts on the new proposal by AFM and DNB? Get in touch and let us know.