By Dutch financial authorities have announced their plans for a licensing scheme for cryptocurrency exchanges and wallet service providers in an effort to combat money laundering and the financing of terrorism.
The nation’s central bank De Nederlandsche Bank (DNB), and the Netherlands Authority of the Financial Markets (AFM) published a report earlier this week arguing that fiat-to-crypto exchanges and custody solution providers need to be licensed as digital assets carry “high financial crime risks.”
The report stated:
“These risks must be addressed effectively, which can be achieved as a result of the international coordination of countermeasures that AMLD5 [the Fifth European Anti-Money Laundering Directive] provides.”
Both authorities stated that they are recommending a licensing scheme as opposed to a registration system as it allows “pre-market entry assessment” to gauge whether any involved party will adhere or are able to comply with the AMLD5 rules & regulations.
The report also argued that a registration system would be “less effective” as it only bears a “limited substantive assessment” of parties.
Furthermore, the authoritative bodies also recommend that the European regulatory framework for corporate funding should be amended to foster blockchain-based development of small and medium enterprises (SMEs) as well as implement the use of digital assets as if they were shares or bonds.
Thus, these authorities also recommended revisiting the national definition of a security, with a broader, new definition in the European legislation to usher in new forms of corporate funding such as security token offerings (STOs) as well as initial coin offerings (ICOs) under the current scope of rules applicable rules.
The report added:
“Amending the definition is also desirable in anticipation of potential European consensus on the qualification of certain cryptos as security under present legislation.”
Furthermore, the nation’s regulators have called for international crypto rules to be implemented based on the fact that crypto services providers in the Netherlands amount to less than thirty with their volumes being “negligible” in comparison to the large-scale players found around the world.
The report stated:
“The evolution of cryptos is primarily internationally-oriented given their inherent cross-border nature, and cannot be confined to the Dutch market alone.”
Notably, earlier this month, two major regulators in Europe, the European Banking Authority and European Securities and Markets Authority (ESMA) both on separate occasions called for ICO and digital currencies rules at the EU level.
Could this proposed licensing scheme lead to new crypto startups entering the Dutch market? Let us know what you think by leaving a comment below.
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