Dutch regulator says national ban on cryptocurrencies would be difficult to enforce

Maria Nikolova

Although the regulator remains cautious about Bitcoin and its likes, it considers blockchain a promising technology.

The Netherlands Central Bank (DNB) has struck a cautious note with regard to Bitcoin and its likes adding, however, that it sees the technologies behind cryptocurrencies as promising. In a Position Paper, published earlier today, the Dutch regulator said that it does not see cryptocurrencies as posing a risk to the financial system stability, as the outstanding value of the cryptocurrency market is small compared to markets of fiat currencies like the euro and the dollar.

But the bank noted that sudden depreciation of the value of cryptocurrencies and certain tokens (the result of ICOs) may lead to a significant harm to consumers and warned that there is no safety net against such losses.

DNB noted, however, that it sees certain potential in the technology behind cryptocurrencies, that is, blockchain. The regulator said it had been working on four projects based on blockchain since 2015. The aim was not to launch a crypto coin, but only to understand the technique better. The results of these studies confirm that the technology is not yet mature enough to play a role in the Netherlands’ payment traffic – the system is too slow, too few transactions are executed per second, and the technology is not sustainable. The DNB notes that the technology is nevertheless interesting and may eventually offer opportunities in the financial world. The regulator underlines the benefits of blockchain for certain tasks such as the validation of documents, verification of identities and transactions.

Regarding any regulation of cryptocurrencies, DNB is 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.

Read this next

Retail FX

Spotware rolls out Manager’s API for cTrader brokers

Spotware Systems, a technology provider for the electronic trading industry, has released its new Manager’s API for Brokers, providing powerful tools for server-server integration.

Metaverse Gaming NFT

Dubai Museum taps Binance to jump onto NFT bandwagon

Dubai’s Museum of the Future, the $136 million UAE government-sponsored museum that opened a few weeks ago, is joining forces with Binance NFT to roll out a range of digital products on blockchain.

Digital Assets

Ripple and Lithuanian FINCI partner for XRP-based payments

Ripple is looking to expand its presence in Europe, forming a new partnership with Lithuanian electronic money institution FINCI.

Digital Assets

Crypto.com enables Shopify merchants to accept crypto payments

Crypto.com has integrated with Canadian e-commerce giant Shopify so global merchants can accept crypto payments and save on processing fees through cash-final settlements.

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

Executive Moves

Solid hires FX industry veteran Darren Barker for multi-bank ECN’s business development

His curriculum vitae includes former roles at Cantor Fitzgerald, Sucden Financial, R.J. O’Brien, Jefferies, Natixis, Unicredit, J.P. Morgan, Raiffeisen, RBS International, UBS, Deutsche Bank, and Citi. 

Inside View

Mihails Safro, xpate CEO: Tips sellers need to know to overcome compliance obstacles

The unprecedented growth of e-commerce changed shopping dramatically last year. Many sellers suddenly faced a rapidly growing number of customers who had to stay home during the lockdown. When some clients adopted Netflix and Spotify as part of a daily routine, others ventured into online business. Robinhood alone saw a whopping 6 million rise in user numbers in 2 months. 

Institutional FX

BMLL delivers Level 3 data to Kepler Cheuvreux for order book analytics and algo performance

The solution covers more than 6.5 years of harmonised historical data from 65 venues and combines it with easy to use APIs and analytics libraries in a secure cloud environment. 

<