Dutch authority raises new concerns over cryptocurrencies

June 15, 2018
Chris Wheal

The Dutch financial markets regulator Autoriteit Financiële Markten (AFM) said it has doubts as to whether entities dealing in cryptocurrencies conform to licensing laws.

Autoriteit Financiële Markten (AFM)

AFM has previously expressed misgivings over cryptocurrencies.

In a letter dated June 13 and issued to market participants seeking to offer cryptocurrency investment opportunities, the AFM said the risks associated with cryptocurrency meant that such companies could be unable to comply with licensing obligations.

“The AFM has serious doubts, partly because of the risks associated with cryptos and their management,” the authority added.

Falling short

Cryptocurrency investment is not subject to regulation under the Netherlands’ Financial Supervision Act, but certain activities may require providers to obtain a licence from the AFM.

Assessing the current landscape, however, the authority claims it found “a (too) limited knowledge of these requirements for many market parties.”

“In combination with the risks associated with cryptos, the AFM has serious doubts whether managers of investment institutions in cryptos can meet the requirements for licensing,” it added.

The comments follow a blog published last week by the Dutch central bank that suggested blockchain isn’t yet ready for implementation in the financial markets.

De Nederlandsche Bank web home page

The Dutch central bank has queried whether blockchain is yet up to the job: Shutterstock

De Nederlandsche Bank (DNB) concluded that distributed ledger technology (DLT) isn’t yet suitable for its existing financial payment infrastructure as it lacks the ability to scale for large volumes of transactions and other issues.

The AFM has previously expressed scepticism over cryptocurrencies. In January, the authority said that it wanted to ban risky investments that are increasingly being marketed online, as providers often played on investors’ fears of missing out. A prime example was investment opportunities in cryptocurrency promoted through initial coin offerings (ICOs).

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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