Dutch Finance Minister Addresses Cryptocurrency Regulation In Letter To Parliament

This month, the Dutch finance minister remarked upon cryptocurrency regulation in the Netherlands and the European Union.

  • On March 8, 2018, the minister of finance for the Netherlands, Wopke Hoekstra (Christian Democratic Appeal party), published a six-page letter to the Dutch Parliament on the topics of cryptocurrency oversight and regulation.

    Hoekstra noted that an estimated 500,000 Dutch households are now in possession of virtual currency, according to market research firm Kantar TNS, but he cautioned that “investing in Bitcoin or other cryptocurrency is not without risks.”

    The finance minister explained that virtual currencies lack the basic guarantees afforded by government-issued currencies and worried that there is no option for recourse through a centralized issuer “in case[s] of misconduct” like hacking or theft. He also highlighted concerns about money laundering and terrorist usage of cryptocurrencies.

    To control the risks of cryptocurrency, Hoekstra suggested a four-part approach:

    • Gaps in consumer and investor protection must be closed, but measures must be proportionate. 
    • The integrity of the financial system must be guaranteed.
    • The innovative techniques behind cryptocurrency, such as cryptography and distributed ledger technology (DLT), must be preserved.
    • The cross-border nature of cryptocurrency requires one approach at the international level. National rules, which are difficult to maintain can easily be circumvented.

    The finance minister pledged to “consult” with credit card companies regarding cryptocurrency purchases, apparently after an inquiry by two MPs.

    A few weeks ago, ETHNews reported on questions submitted to Hoekstra by MP Henk Nijboer (Labour Party) about ING Group’s banking relationships with two prominent cryptocurrency companies. While Hoekstra did not address the worrisome rumors about Bitfinex and Tether in his letter to Parliament, the finance minister obviously has his finger on the cryptocurrency pulse, which bodes well for market participants.

    With respect to international efforts, Hoekstra lauded the European Commission’s work related to cryptocurrency, and acknowledged calls for virtual currency regulation by his counterparts in France and Germany. Realizing the global nature of cryptocurrency, he encouraged cooperative efforts, like the discussions which will take place at the G20. The Netherlands, Hoekstra wrote, is also party to the Financial Action Task Force.

    Addressing an inquiry by MP Farid Azarkan (DENK), the finance minister said that the Dutch central government is “not active as an investor and therefore does not [undertake] speculative investments,” a policy that extends to cryptocurrency.

    Under existing rules and regulations, Hoekstra said, cryptocurrencies and related tokens “usually” do not qualify as financial instruments or investments. Likewise, there is no specific guidance for the design of cryptocurrency exchanges and the Dutch Authority for the Financial Markets (AFM) cannot “enforce performance.”

    However, the finance minister said rules laid out by the Authority for Consumers and Markets (ACM) do apply, “such as requirements for information and reflection time when selling over the internet.” He noted that, unfortunately, these standards offer a “lower level of protection.”

    Finally, Hoekstra promised to “dedicate” himself to a “European approach to ICOs,” likely in recognition of the European Commission’s recent FinTech action plan. Published last week, the plan found that “an assessment of the suitability of the current EU regulatory framework” with respect to ICOs is necessary.

    Translations by Google.

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