Dutch regulators call for crypto licensing system
The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten – AFM) and the central bank are energetically pushing for a national licensing system for cryptocurrencies.
According to AFM and De Nederlandsche Bank (DNB), there must be a licensing system for crypto-exchange platforms and providers of crypto-pocket purses, so money laundering and terrorist financing can be “combated more effectively”.
![Another warning](https://www.fintechfutures.com/files/2016/09/Flag-of-the-Netherlands-holland.png)
Another warning
Along with this desire, they reckon adjustments to the European rules for corporate finance are needed to provide space for small-scale enterprise financing through blockchain technology.
As others have said, the duo believes the international nature of cryptos requires international coordination to “effectively protect Dutch consumers against the greatest risks”.
AFM and DNB state this in a joint recommendation, which the Minister of Finance has sent to the House of Representatives.
They argue for a national licensing system in the Anti-Money Laundering and Terrorist Financing Act. In the European context, they note that the fourth anti-money laundering (AML) directive has been revised to address this risk.
In their view a permit system makes it possible to “test parties at the gate and, if necessary, exclude them from the market in advance”.
In the longer term, and looking at the application of blockchain technology, AFM and DNB reckon it may offer opportunities for financing small-scale business activities if the cryptos offered represent clear and enforceable rights, such as a share or bond.
The AFM and DNB therefore recommend that the European rules for corporate financing be adapted to provide space for cryptos that are comparable to a share or bond.
This involves proportional rules for trading and adjustments to the rules regarding custody and settlement in order not to obstruct the advantages of blockchain technology unnecessarily.
At the national level, the AFM and DNB want to adapt the concept of securities in accordance with the broader definition in existing European regulations. This offers the AFM “room to bring some cryptos under its supervision”.
Interestingly they say: “Due to the sharp decline in popularity of cryptos, the necessity has been taken to impose national rules in anticipation of this.”
The AFM and DNB have regularly warned against cryptos and initial coin offerings (ICOs), due to the “risks of deception, fraud, cybercrime and manipulation”.
In their view, those risks are still there.