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Wopke Hoekstra the Minister of Finance of the Netherlands advised the Senate and the House of his plans to take measures regarding the regulation of cryptocurrencies, which he claims to be expanding and requiring better regulation. In a public letter, Hoekstra said it was his intention to work with other European nations on this issue, but he acknowledged that regulations will take time to develop.
Hoekstra noted that the number of Dutch citizens who have invested in cryptocurrency has jumped over the last year, with half a million households now owning it.
Gaps in protection
There is a need to fill the gaps in the protection of consumers and investors, said Hoekstra, but actions must be proportionate to the risks. In addition, the integrity of the financial system must be guaranteed, as well as the integrity of cryptocurrency-supporting technologies, such as cryptography and the distributed registry.
European countries have recognized the risk of cryptocurrencies since deposits are not guaranteed. It is also feared that cryptocurrency will be used for illegal purposes, such as money laundering.
Current regulatory frameworks for cryptocurrency are inadequate, he said. As a result, Germany, France and the European Commission called for discussion. The Netherlands, he said, should play a pioneering role.
Cryptocurrencies, because of the absence of central authority, are intrinsically cross-border currencies, noted Hoekstra. In addition, national regulations may be difficult to apply. Therefore, he believes that international measures are needed.
Hoekstra will be part of the Financial Action Group, an international intergovernmental organization that focuses on the fight against money laundering and the fight against the financing of crime and terrorism.
The anti-money laundering rules that apply to banks and other financial institutions also apply to cryptocurrency trading platforms and voucher providers. digital storage.
This means that customer due diligence obligations, including the customer’s identity, must be determined. In addition, financial institutions must register, comply with the requirements of reliability and adequacy and report unusual transactions to the national financial intelligence unit.
With regard to government agencies investing in cryptocurrencies, Hoekstra said that the guidelines for investing in the cryptocurrencies of local authorities are laid down in the law on local government financing and the government. other regulations.
He said that he will devote himself to a European approach to OIC regulation, which he noted that it can be used to finance new products, but that it is of a nature speculative.
Also read: French, German financial leaders call for a global crackdown on cryptocurrency
Derivatives call for action
He will also look for an approach to deal with derivatives such as futures and binary options.
With respect to derivatives, it has been possible to trade bitcoin derivatives from the Chicago Mercantile Exchange and the Chicago Board of Options Exchange.
Binary options are also derivatives that can be used to speculate on the future value or event of an underlying instrument, which can be a cryptocurrency.
The AFM, the Dutch Financial Markets Authority, and the European Securities and Markets Authority (ESMA) have reservations about the sale of derivatives, including binary options, to non-professional investors, taking into account the risks incurred. Hoekstra thinks it’s important that regulators approach the sale of these products to nonprofessional investors, especially those involving cryptocurrencies.
He stated that he will support swift action in the Netherlands regarding the sale of risky derivative products (including cryptocurrencies) in order to attract the attention of the authorities of European surveillance.
It will also support the power of the AFM to issue advertising statements regarding risky financial products such as binary options to consumers.
Hoekstra stated that he hoped that the legislation and regulations could come into effect at the end of 2019.
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