Crypto Licensing System to be Introduced

The Minister of Finance of Netherlands has gotten official advice that a licensing system should be launched for crypto services, according to a report from Nederlandse Omroep Stichting (NOS).

Hoekstra sought for advice regarding cryptocurrencies from the Netherlands’ Authority for the Financial Markets and the local central bank, De Nederlandsche Bank, at the start of 2018

The minister declared that he started working in collaboration with the word he received and as what was reported, the greatly-reduced crypto speculative mania has pushed investor protection actions to become less urgent. As a result of this, the drive is being placed on the avoidance of money laundering and terrorist financing through crypto.

The Netherland’s Financial Intelligence Unit stressed that the occurrences of dubious transactions with cryptocurrencies has risen from an average of 300 to up to 5,000 a year.

The recommended licensing system would mandate crypto exchanges and wallet providers to supervise their customers’ transactions and immediate report skeptical activity to authorities. The exchanges will also have to gather and keep data regarding their customers to be able to give it to authorities should an investigation be conducted.

The Netherland’s central bank announced that the firms will be trialed before being given the license, for instance to assess if they are able to gather the necessary information from users.

Richard Kohl, who acts as a board member of the Bitcoin Nederland Foundation, has claimed that the measure is “dramatic for young innovative companies,” deeming the new rules as a crucial step backward in the local innovation culture.
Kohl expects the new regulation to rake in huge amounts of paperwork and expenses to the firms just to be able to stay compliant. All of this, Kohl said, will lead to major competitive disadvantages compared to traditional parties such as banks.

Kohl also claimed that too little research has been conducted about the tangible dangers brought on by cryptocurrencies, and that he considers the measures to be extreme. He also expressed his concerns about other potential problems that come with the requirement of the storage of user data:

“Banks and financial institutions already need to keep track of customer and transaction information… you may wonder how well our personal information is protected and used, such as how the Chinese government wants to be able to follow all transactions of all citizens.”