Clearer stance on cryptocurrency needed in Netherlands: Experts
Politicians, cryptocurrency companies and regulators appearing in parliament on Wednesday all agreed that clearer policy and regulations are needed around the developing cryptocurrency sphere. A discussion on the subjects of Bitcoin, cryptocurrencies, and Initial coin offerings was held in the Tweede Kamer, the lower house of Dutch parliament, bringing representatives from the financial regulator AFM, the Dutch central bank, consumer authority ACM, Dutch bank ING, and several other speakers before inquisitive MPs who wanted to know more about the risks involved and the innovations yet to come.
Niels Lemmer of investors' association VEB was most emphatic in his demand that the government intervene in this sector to make it a level playing field with traditional financial institutions. He referred to new, much stricter, rules that were implemented for banks and investment companies at the start of this year. "We implemented thousands of new rules to protect investors. But something parallel like an ICO is not regulated. We see all the characteristics of a bubble, but people don't want to hear that this involves an unregulated market. Now we're still in time to create a regulatory framework so that we can benefit from this innovation, without the excesses."
Rutger van Zuidam of Dutchchain expressed hope that the regulators will come up with clearer rules. "The wave of ICOs is here, it won't go away. So create an environment in which the Netherlands is the best place for companies to develop", he said.
Parliamentarians and experts agree that there should be more support for investors in the sector. But what those regulations should look like is hard to determine.
What could be particularly difficult for the Dutch government is crafting an effective policy that factors in the tremendous growth of the financial technology sector in the Netherlands, and implementing that policy on a new industry that is not at all confined to Dutch borders. An AFM position paper to the Tweede Kamer called for ICOs to be regulated at an international and European level because they are cross-border by nature.
If the Netherlands simply bans ICOs, it will just move abroad, Thomas van der Bijl from Follow Coin, a company that provide investors with information about various ICOs, said.
What the Netherlands needs right now is more warnings for people interested in dabbling in cryptocurrencies, said Lars van de Ven of the AFM’s FinTech team. He repeated an assertion he made to the NL Times in November that the enormous hype around ICOs and cryptocurrencies could be a threat to people willing to spend money on the burgeoning alternative financial market.
So far the Dutch financial watchdogs, the authority on financial markets AFM and central bank DNB, have been unable to implement rules on this sector. Because cryptocurrency is not a valid currency and therefore doesn't fall under their mandate. ICOs on the other hand, in which money is collected from investors, can fall under the supervision of AFM. Earlier on Wednesday AFM director Merel van Vroonhoven called for a ban on risky investments offered onlined, such as cryptocurrency derivatives.
The ability to make payments using cryptocurrencies is also, for now, too slow to be used widely, suggested, Petra Hielkema of the Dutch central bank DNB. When asked whether or not the DNB should issue its own crypto token, which MP Mahir Alkaya dubbed a “DNB coin”, Hielkema said it is not a good idea while the technology is still quirky and developing.
“There are all kinds of questions that have not yet been answered. That is why we are very critical about whether or not central banks should issue a digital currency themselves,” she said during the hearing.