Cryptocurrency investors are faced with an additional hurdle in the European Union as the Netherlands Authority for Financial Markets has raised some questions over whether entities dealing in cryptocurrencies conform to licensing laws. This was revealed in an official letter published on June 13, 2018, that was sent to market participants who are looking to make cryptocurrency investment opportunities available to their clients.
The regulator said that risks associated with cryptocurrencies might mean that these companies could fall short of their licensing obligations. In the letter, the AFM said that it had serious doubts on the issue partly due to the risks associated with cryptos as well as their management.
Interestingly, cryptocurrency investment is not subject to any form of regulation under the Netherlands Supervision Act, but specific activities may require the providers to obtain a license from the AFM. So far there is not much legal clarity over cryptocurrency investments in EU countries with the EU Commission being quite ambivalent on the situation.
When assessing the current landscape for cryptocurrencies, the authorities also claimed that it found what it termed as “a too limited knowledge of these requirements for market parties.”
“In combination with the risks associated with cryptos, the AFM has serious doubts whether managers of investment institutions in cryptos can meet the requirements for licensing,” it added, quoted by local news outlet Accountancy Van Morgen.
Earlier this month, the Netherlands’ central bank joined what seems to be a growing consensus on blockchain’s current shortcomings, announcing the technology implementations available are “not sufficiently efficient” to service the banking sector. Still, a government report released in May considered cryptocurrency to be broadly “low risk” in relation to financial stability.
Jay is pretty interested in the crypto space. He’s written for several publications on the topic and has lots of ideas on how the world can be made a better place with blockchain technology. He’s also a fintech journalist with some years of experience and enjoys writing about new startups, ICO’s as well as any other intriguing news that catches his fancy.