The Netherlands is actually taking a step backward, according to a board member of the Bitcoin Nederland Foundation as the Dutch govt. wants crypto exchanges and wallet providers to apply for a permit or get punished.
A Big Step Backward by the Netherlands
According to a prominent Dutch publication, in order to make it not possible to purchase or sell cryptocurrencies anonymously, Netherlands Authority for the Financial Markets and De Nederlandsche Bank have handed over the advice to introduce a licensing system to the Minister Hoekstra of Finance. “The minister immediately announced that he would take over the advice.”
In December itself, Hoekstra called out for a permit for crypto trading platforms and wallet providers need to be put in place.
Earlier last year, Hoekstra had asked for the advice when Bitcoin and cryptocurrencies were at their peak. However, due to the ongoing bear market since then, “interest among consumers has declined somewhat,” that made danger of fraud and risky speculation less urgent according to Authority for the Financial Market (AFM) and De Nederlandsche Bank (DNB) regulators. The focus, for now, is on the prevention of terrorist financing and money laundering via cryptos.
Apply for Permit or Get Punished
Meanwhile, there has been an explosion of unusual transactions, from an average of 300 to almost 5,000 per year as reported by the Financial Intelligence Unit (FIU), an independent investigation unit of the police.
Hence, a new European directive is tackling this issue. According to this, crypto exchanges that offer fiat-to-crypto services or wallet providers have to comply with the same rules as financial institutions.
This means “these parties must keep an eye on all transactions of their customers, and report suspicious transactions to the authorities,” just like banks do.
Apparently, all EU member states need to “introduce these stricter rules” with further tailoring allowed on countries’ part. The Dutch publication says “The Dutch government opts for a system with permits,” which means exchanges and wallet providers must apply for a license. Before granting a license, these firms will be questioned if they are able to collect data and deal with them properly.
Richard Kohl, a board member of the Bitcoin Nederland Foundation who has been in discussion with regulators has been quoted as saying,
“This is dramatic for young innovative companies. We have long fought for a strong innovation culture in the Netherlands, this is a big step backward.”
There are about 30 such firms in the Netherlands that needs to apply for a permit if they want to continue their work and if they do not, “then they will soon be punishable.”
These new rules will bring in a huge amount of paperwork, require a lot of money for compliance and get a permit, and causes a major competitive disadvantage compared to banks, said Kohl that might mean “many parties will feel compelled to stop.”
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Having a background in writing, I worked on a wide array of industry topics and have recently entered the world of Blockchain and Cryptocurrency.