Many ICO's showing strong interest in Netherlands; Regulator concerned

Glimmer presents their ICO at a pitching session at ICO Event Amsterdam, 29 Nov 2017
Glimmer presents their ICO at a pitching session at ICO Event Amsterdam, 29 Nov 2017Photo: Zachary Newmark / NL Times

The Netherlands seems to be an interesting option for companies arranging for a crypto currency token sale and initial coin offering, or ICO. Speaking to NL Times at the ICO Event Amsterdam on Wednesday, a number of ICO founders said they are interested in setting up shop in the country, and in bringing more jobs to the Netherlands. The event was attended by 400 people from a variety of industries, all interested in a burgeoning field that allowed organizations to raise over $3.6 billion in 2017 alone.

Spotcoin hopes to raise $60 million with its own ICO. Based in the Eastern European country of Georgia, the company handles business to business high-value transactions of 25 thousand dollars or more. It is already in the process of setting up a Dutch firm to handle their ICO, CEO Timothy Gick said to NL Times. The ICO will generate operating capital that will "effectively establish a bank, a blockchain academy, and to fund mining operations."

The company, which mostly handles same-day trades of 100 coins or more, expects to arrive in the Netherlands around the end of March. "Ideally we want to establish a blockchain academy" Gick said. "We want to educate businesses that want to accept cryptocurrencies, to help business already doing so to expand further, and to help large firms that want to get into the field but have concerns about the higher risk."

TenX, a company that did an ICO of $80 million selling their token called PAY, is looking into possible collaborations with many Central Banks, including Dutch central bank DNB. The company launched an app that serves as a wallet for multiple cryptocurrencies and it sends it's users debit cards so that they can spend their coins. "I think the Netherlands is forward thinking, but that they don't cut corners", co-founder Dr. Julian Hosp said in response to a question posed by NL Times. 

Arbidex, a company that uses automated algorithm to find cryptocurrency arbitrage opportunities on multiple token exchanges, is moving to the Netherlands next month, CMO Maria Stankevich told NL Times. The company is already based in Russia and Singapore, and just incorporated in Switzerland. Arbidex chose the Netherlands as its next location, because Dutch investors showed much more enthusiasm than those in Germany, London and Asia. 

"We are really excited to move here and we have had great contact with [Dutch authority on financial markets] AFM. A lot of people in the Netherlands say they are going to invest", Stankevich said. Arbidex will relocate five employees from Russia to Amsterdam, and hire between 10 and 12 more in the Dutch capital. Their ICO is expected to raise up to 16 million euros. 

Amsterdam, London and Berlin are the top three places in Europe with specialized knowledge on ICOs and blockchain, according to Mark Noorlander, co-founder of Flashboys - a two-year old ICO and blockchain development & consulting firm based in Rotterdam. "The Netherlands is a good place to work on ICOs but the government makes it hard", fellow co-founder Michiel den Hollander, said to NL Times. "There will be a day that the AFM will come with regulations. Right now they're just asking questions."

Flashboys specializes in smart contracts based on Ethereum. "We used our own platform to launch a 25 thousand euro ICO as a test to prove we could do it", Daisy Visser, Growth Hacker at Flashboys, said. According to Mark, the company uses the ICO as training for new employees. "So we can show them how we did it", he said. According to Mark, a conservative estimate is that it costs 100 thousand euros to launch an ICO worth a few million euros, and that can rise to 500 thousand euros for a bigger ICO where you also hire influences.

The AFM is positive about the technological innovation and new access to capital, but that enthusiasm is tamped down by fraud and concerns of financial bubbles. "I think the ICO mechanism is fairly promising and can contribute to a more efficient use of capital markets", Lars van de Ven of the FinTech team at AFM said to NL Times. "The way it is used now is worrying the AFM as maybe more of a fad."

Not all ICOs fall under the AFM's mandate, which is defined by Dutch law and can only be changed by the government changing that law to state that all ICOs fall under AFM mandate, Van de Ven said. Utility tokens currently fall outside the mandate. "The ICOs that do fall within the scope of our mandate will be followed closely. If they do something illegal, we can fine them. If they don't, we won't", he said. "If we see too many scams, regulators will be forced to step in and will kill it."

"At the moment, if companies approach us we will ask them how they are structuring their ICO, and we urge them to work towards a responsible ICO", Van de Ven said.