Parliamentary discussion on cryptocurrencies

There are ongoing discussions in the Dutch national parliament regarding cryptocurrencies, and more specifically the speculative character and related risks for (private) investors.

At this stage, the Dutch government does not have clear insight in how many Dutch citizens are involved in investing in cryptocurrencies, yet explains that the reason for this big and increasing interest among the Dutch population probably is the low interest offered for savings by traditional banks.

The former minister of finance clearly expressed that investors are responsible for their own investment decisions. The AFM and Dutch Central Bank have been warning on a regular basis about the risks and volatility when investing in cryptocurrencies, the fact that there is no central organ releasing the coins and that these assets are not backed by the Dutch deposit guarantee scheme (red. Which covers savings in normal bank accounts up to 100,000 euro per person in case a bank goes bankrupt).

On the 5th of September 2017, the minister expressed that currently there are no plans to regulate cryptocurrencies, besides existing financial regulations, except the supervision on money laundering and financing of terrorism. This is mainly based on a Directive from the European Union from mid 2016, and will probably force exchange platforms and custodian wallets providers to sharpen their KYC policy and to notify relevant authorities in case of suspicious transactions.

Due to the international character of ICOs, the Dutch government does not take a position on this matter and thinks it shall be regulated on a European level. In case a token qualifies as security, existing financial regulations apply.

At this stage, the Dutch government does not see high risks for bitcoin to disturb the (European) economy. The total value (red. At the moment of writing in September) equalled €160 billion. The total value of all transactions within the European Union exceed €275,000 billion.

In December 2017, members of the parliament of several political parties requested a parliamentary debate on cryptocurrencies. They are especially concerned about the speculative character, the fact that people are taking extreme high risks and to which extent the government needs to protect its citizens.

On January 24th, the Dutch parliament organized a hearing on cryptocurrencies with industry experts, including the AFM, the Dutch Central Bank, economists, blockchain experts and blockchain projects. In short, they concluded blockchain technology is here to stay and cryptocurrencies are an integral part of this. Secondly, clear regulations are necessary towards offering investment products (ICOs) and services (enabling speculating on price increases/decreases). This will not only offer the necessary protection towards (retail) investors, but also offer opportunities to put the Netherlands at the front of the fintech revolution and attract start-ups to establish themselves in the Netherlands. The Central Bank expressed its concerns towards money laundering and financing terrorism the moment cryptocurrencies are exchanged for fiat money. They care less about the speculative side and price fluctuations of cryptocurrencies, as the impact on the real economy at this stage is limited.

At the end of January, minister of finance Wopke Hoekstra stated that in the following three to four weeks he will investigate whether regulations or even a ban on bitcoin and other cryptocurrencies is desirable. It is, however, unlikely that a total ban will occur, as bitcoin and other cryptocurrencies currently not considered to be legal tender.