Cryptocurrencies do not pose risks to the financial stability of the Netherlands but financial institutions may face integrity risks as buyers and sellers are not identified.
The cryptocurrency market is too small when compared to the market of the USD and EUR so as to be important to the financial stability of the Netherlands, according to the Dutch Financial Stability Committee (FSC).
In a release, out earlier today, the body, which consists of representatives of the Dutch central bank DNB, the financial markets regulator AFM and the Ministry of Finance, said that cryptocurrencies themselves do not pose risks to the financial stability of the Netherlands.
At the same time, the Committee warns consumers and financial companies explicitly about the risks of cryptos and the so-called Initial Coin Offerings (ICOs), as investors are not protected by regulation when they hold or trade cryptocurrencies. In addition, financial institutions face integrity risks because the identity of buyers and sellers can not be known or is insufficiently known.
Regarding any restrictions on the offering of cryptos, the Committee exchanged views on the possibilities for taking restrictive measures and found that they should preferably be examined at international level.
This stance broadly echoes the one expressed by the Netherlands Central Bank (DNB) last month. Back then, the DNB struck a cautious note with regard to Bitcoin and its likes adding, however, that it sees the technologies behind cryptocurrencies as promising.
Regarding any regulation of cryptocurrencies, DNB said it was against imposing a national ban on this market. The regulator notes that such a ban would be difficult to implement given the international nature of this market.
Whether certain restrictions should be imposed on trading in CFDs on cryptocurrencies is a matter raised in a recent public consultation launched by the European Securities and Markets Authority (ESMA). ESMA is currently discussing whether CFDs on cryptocurrencies, whose underlying assets have displayed very high price variation, should be addressed in the measures and whether a 5:1 initial leverage would provide investors with sufficient protection. Alternatively, a lower leverage limit (2:1 or 1:1) or stricter measures (such as a prohibition on the marketing, distribution or sale of CFDs in cryptocurrencies to retail clients) could be considered.