Recent cryptocurrency developments in the Netherlands
The Netherlands is seeking to regulate cryptocurrency companies, supposedly in a bid to prevent money laundering and alleged terrorist financing. The decentralized and censorship-resistant cryptocurrency has been accused of many crimes, including being used by criminals to launder money, evade tax and fund terrorist activities throughout the world.
In a brief note published in the local daily De Telegraaf , the Dutch central bank said that cryptocurrency entities like exchanges will be compelled to know and to reveal the identities of their customers. Its real motivation is to curb illicit financial flows facilitated under the cover of cryptocurrency transactions, something a number of regulators in Europe are increasingly becoming concerned with.
The proposed law will effectively place virtual currency companies directly within the regulatory purview of the Dutch central bank. In this way stricter rules for the art trade and brokers will also be introduced. De Nederlandsche Bank has generally been open-minded about digital assets, while reiterating the need for inter-state regulation to curb issues of abuse, fraud and other criminal activity.
But the regulation of digital currencies in the Netherlands is broadly reflective of wider sentiment throughout the European Union, where the treatment of crypto assets remains somewhat opaque. In Spain, for example, the government last month said it had identified 15, cryptocurrency investors it will monitor to prevent tax evasion and money laundering.
Spain vowed to ensure that investors pay taxes on capital gains from digital currency transactions and that they declare any other benefits accrued from trading. Different countries in Europe are experimenting with cryptocurrency regulation at different levels. The U. There is no congruency in approach to digital currency regulation within the European economic bloc. But the figure fails to register on the radar of global illicit flows when compared to commercial banks. What do you think about the proposed crypto regulation in the Netherlands?
Let us know what you think in the comments section below. Need to calculate your bitcoin holdings? Check our tools section. An emergency… read more. Jeffrey Gogo is an award winning financial journalist based in Harare, Zimbabwe. A former deputy business editor with the Zimbabwe Herald, the country's biggest daily, Gogo has more than 15 years of wide-ranging experience covering Zimbabwe's financial markets, economy and company news. He first encountered bitcoin in , and began covering cryptocurrency markets in Share this story:.
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In the Dutch city of Arnhem, an experiment is carried out with Bitcoins - you can pay by them for communal, dental and other services. According to Dutch fiscal rules, crypto-money is taxable as assets Box3 when declaring. With all the "friendliness" to the crypto-field and the blockchain, the cryptocurrency turnover is not regulated at the legislative level and the country, together with other EU members, makes the requirements for the client accounts and data protection more rigorous. Cryptocurrencies in the Netherlands are equated to the means of exchange, and not to money, - the relevant decision was made by the Supreme Court. Due to the unregulated nature of the field it is not within the scope of the Law on Financial Supervision , the authorities cannot control it, which increases the number of fraudulent schemes. The Ministry of Finance insists on mandatory registration of trading and exchange crypto-platforms, obtaining licenses for cryptocurrencies by them and users identification. The Government is ready to implement the procedure prior the beginning of
Know Your Customer for Crypto Companies
First published on Thomson Reuters Regulatory Intelligence on September 5, Cryptocurrency exchanges, also known as digital currency exchanges or cryptoexchanges, are essentially businesses that allow customers to trade cryptocurrencies or digital currencies for other assets including conventional fiat money or different digital currencies. They can also be market makers that take bid-ask spreads as transaction commissions for their services or charge fees as a matching platform.
Cryptocurrency exchanges are becoming integral to the crypto-asset ecosystem. Like crypto-assets in general, the rise of cryptocurrency exchanges has not yet raised sufficient concerns from a financial stability perspective, but their impact on consumer protection and money laundering has prompted regulatory intervention. In this article we briefly consider the international regulatory response to cryptocurrency exchanges and custody providers. The report noted in particular that while crypto-asset platforms are yet to pose a threat to financial stability, it was important to coordinate the work with other financial regulators such as the Basel Committee on Banking Supervision and the International Organization of Securities Commissions IOSCO given the consumer protection and money laundering concerns.
Specifically, the FSB noted that IOSCO's Committee on Secondary Markets has already begun to examine internet-based platforms, including cryptoasset platforms and has identified a number of key issues to consider including: transparency, custody and settlement, trading and cyber security and systems integrity. Also, where crypto-assets are used solely for payment purposes and are not securitiesthe FSB mentions that crypto-asset platforms trading may be viewed more as part of the payments infrastructure coming more under the remit of the Basel Committee and the Committee on Payments and Markets Infrastructure.
The reason for this is that the directive, which has to be transposed by member states by January 10,extends the Fourth AntiMoney Laundering Directive by bringing virtual currency exchange platforms and custodian wallet providers within the scope of the EU's anti-money laundering requirements.
The 5MLD streamlines member states' regulatory regimes for virtual currency by defining certain key terms which member states will implement into their own anti-money laundering legislation. In particular, the directive defines "virtual currency" as a "digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.
It also defines custodian wallet providers as an "entity that provides services to safeguard private cryptographic keys on behalf of their customers, to hold, store and transfer virtual currencies. Despite the UK's planned withdrawal from the EU, it is likely the UK government will implement rules equal or similar to the changes introduced by the the netherlands cryptocurrency exchange laws in order to retain its global standing in the financial markets and potential equivalency in the eyes of the European Commission.
The PRA's " Dear CEO " letter reminded firms within its regulatory remit of their obligations regarding existing or planned exposure to crypto-assets. The FCA stated that where a firm offers banking services to current or prospective clients who derive significant business activities or revenue from crypto-related activities, it may be necessary to enhance the scrutiny of the client and their activities.
It has been suggested that the "Dear CEO" letters are the tip of the iceberg and that an FCA thematic review may follow once firms have had the opportunity to digest the content of the "Dear CEO" letters. The Dutch government will implement the rules introduced by the 5MLD. It is anticipated this will be done on time although it is worth noting the Netherlands has only just implemented the 4MLD more than a year too late. While the AFM sees the potential of blockchain technology for financial services, it has concerns that ICOs are vulnerable to misrepresentation, fraud and manipulation.
Often ICOs are structured in such a way that leaves the netherlands cryptocurrency exchange laws outside the regulatory perimeter meaning that they are not subject to supervision by the Dutch regulators. In addition, due to their unregulated status and the anonymous nature of the transactions involved, ICOs are attractive for the money laundering purposes.
The DNB has issued warnings relating to crypto currencies on their basis of their unregulated status which means that they are not subject to a deposit guarantee scheme nor counterparties from which losses may be recovered. However, the DNB also concludes that the total value of cryptos in circulation is relatively small compared to the liquidity available in, say, U.
The DNB also sees the possibilities of the blockchain technology underlying bitcoin. Sincethe DNB has built four crypto prototypes based on blockchain technology, not to launch a national crypto, but to gain insight into the technology. According to the DNB the technology is still too underdeveloped to play a role in payment systems but is hopeful that in the longer run it will offer possibilities for transactions in the financial world and.
From a UAE regulatory perspective this has been the most significant relevant recent development. The new ADGM crypto framework codifies the governance, oversight and transparency over crypto asset activities. This follows the completion of the public consultation on the introduction of a robust crypto asset regulatory framework by the ADGM Financial Services Regulatory Authority on May 28, The framework is designed to address the risks associated with crypto asset activities, including risks relating to money laundering and financial crime, consumer protection, technology governance, custody and exchange operations.
The new framework is one of ADGM's projects illustrating its ongoing commitment to bolster the economic diversification of the UAE through new and sustainable initiatives. The guidance elaborates on ADGM's approach towards the regulation of crypto asset activities and is a useful resource for potential applicants. At present, the Hong Kong Monetary Authority and the Securities and Futures Commission regard crypto currencies as "virtual commodities" as opposed to a currency.
These assets are not subject to regulation provided the cryptocurrency in question does not have the characteristics of a "security". As a result, an exchange facilitating secondary trading of cryptocurrencies only attracts licensing requirements to the extent such assets qualify as securities. In this case, a cryptocurrency exchange may also be considered a stock market or an automated trading system provider under the securities legislation.
Further, while payment cryptocurrencies such as bitcoin are not regulated, bitcoin futures contracts trading on U. The Monetary Authority of Singapore MAS does not regulate cryptocurrency per se the netherlands cryptocurrency exchange laws has been monitoring its use to assess if regulations are required in this area. Under this bill, MAS intends to regulate, among other activities, virtual currency services, which is the buying or selling of virtual currency or the provision of a platform that allows persons to exchange virtual currency in Singapore.
Only virtual currency service providers that process funds or virtual currencies will fall within this new proposed regulatory ambit.
Virtual currency exchanges that possess funds will also be expected to hold a payment services license. In Australia, digital currency exchanges that trade cryptocurrencies or custodians who hold crypto-assets that are not characterised as financial products see INFO are not subject to regulatory oversight by the Australian Securities and Investments Commission ASIC under the Corporations Act However, if the digital currency click the following article facilitates the netherlands cryptocurrency exchange laws trading of cryptocurrencies that are characterised as financial products see INFO the operator of that exchange will need to hold an Australian market licence with appropriate authorisations by ASIC.
Similarly, custodians who hold crypto-assets that are characterised as financial products are subject to ASIC regulation under the Corporations Act They are required to hold an Australian financial services licence AFSL that authorises them to provide custodial or depository services to clients with respect of financial products, and need to comply with obligations imposed upon them as AFSL holders. As per the staff notice, cryptocurrency exchanges that permit the trading of coins, tokens or cryptocurrencies that qualify as "securities" will be subject to Canadian securities law requirements.
Although the staff notice does not suggest that bitcoin itself is a security, some cryptocurrency exchanges may take the view that they are not subject to Canadian securities regulation because they do not permit the trading of securities.
However, many cryptocurrency exchanges also permit the trading of coins or tokens that may be securities, and some cryptocurrencies may also be considered securities. Accordingly, such cryptocurrency exchanges may be subject to Canadian securities laws to the extent there are Canadian market participants.
So far, no cryptocurrency exchange has obtained the recognition required, or an exemption from such recognition requirement, in order to allow Canadians to participate in on-exchange securities trading.
AML and money services business laws may well apply to cryptocurrency exchanges operating in Canada or the netherlands cryptocurrency exchange laws Canadian clients. The Canadian Department of Finance recently published certain draft amendments under the Proceeds of Crime Money Laundering and Terrorist Financing Act affecting both financial and non-financial entities, including dealers in virtual currency and foreign money services businesses.
These amendments are expected to be published towards the end of with a view to implementation in early The proposed amendments introduce many new directives, including that persons and entities dealing in virtual currency are regulated as money services businesses. This will invariably impact well-known cryptocurrencies such as Bitcoin.
In its last evaluation of Canada inthe FATF identified several deficiencies in the Canadian model, which have been addressed by proposed amendments. In the United States, trading of crypto-assets is regulated by many different agencies at both the federal and state levels. To the extent a crypto-exchange permits certain regulated commodities transactions or swaps in crypto-assets, it will be subject to regulation by the Commodity Futures Trading Commission CFTC.
The U. Treasury Department's Financial Crimes Enforcement Network FinCEN deems businesses involved in buying and selling of cryptocurrency to customers or transferring cryptocurrency on behalf of customers to be money services businesses required to register with FinCEN and maintain AML compliance programs and follow other U.
With respect to applicable state law, New York State views the buying and selling of cryptocurrency as money transmission and has promulgated regulations requiring licensing of persons engaged in the virtual currency business. The DFS also has issued special "bitlicenses" to engage in certain virtual currency activities such as buying and selling specified virtual currencies and providing payment processing services for merchants accepting bitcoin in payment to several businesses.
The SEC regulates securities transactions, broker-dealers, investment advisers and other securities market participants. If a cryptocurrency or a product that is linked to a cryptocurrency is determined to be a security, the offer and sale of such cryptocurrency or product must comply with the U.
Securities Act or compliance with an exemption from such registration. These obligations on sellers generally apply regardless of whether the crypt-asset is traded through a regulated exchange. Additionally, a crypto-exchange needs to understand the various broker-dealer rules, registration requirements and exemptions under the U.
Those who advise on the trading of crypto-assets that constitute securities, whether through an exchange or not, may need to register with the SEC under the U. Investment Advisers Act. The CFTC's regulatory jurisdiction includes commodity futures contracts, options on futures and swaps, but generally excludes spot contracts and forward transactions unless they are leveraged or financed.
The CFTC also has anti-fraud jurisdiction the netherlands cryptocurrency exchange laws the commodity spot and forward markets. Inthe CFTC determined that bitcoin was properly defined as a commodity. To the extent another cryptocurrency falls under the definition of commodity, then futures, options, swaps and leveraged products involving such cryptocurrency are subject to regulation under the US Commodity Exchange Act.
Anyone brokering or dealing in such transactions may the netherlands cryptocurrency exchange laws required to register with the National Futures Association NFAfor example as a futures commission merchant, introducing broker or swap dealer. Moreover, certain products may only be sold to "eligible contract participants" even if traded on a regulated commodity crypto-exchange.
Those who advise on the trading of crypto-assets that constitute commodities, whether through an exchange or not, may need to register with the NFA as a commodity trading adviser or a commodity pool operator. There are approved cryptocurrency futures products being traded on different commodities exchanges such as the Chicago Mercantile Exchange and the CBOE Futures Exchange and through swap execution facilities such as LedgerX and TeraExchange.
Both the SEC and the CFTC have issued numerous statements and advisories to the public to urge caution in investing in cryptocurrencies and take into consideration the various risks involved in investing in cryptocurrencies, including the fact that many of the systems and platforms on which trading occurs are not registered but perhaps should be or are located outside the United States and thus potentially outside the jurisdiction of U.
Simon Lovegrove is head of financial services knowledge — global, based in London. Albert Weatherill is an associate in the financial services group.
Trading activities where the clients' or counterparties' source of wealth arises or is derived from crypto-assets. Where the firm wishes to arrange, advise on, or take part in an initial coin offering ICO. Simon Lovegrove. Albert Weatherill. Etelka Bogardi. Floortje Nagelkerke. Kathleen A. Andrew James Lom. Anthony de Fazekas. Stella Cramer.
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Muscat specifically addressed the bitcoin blockchain's ability to handle, store and process sensitive data in an immutable and decentralized ecosystem. Simplification of the regime of currency transactions for residents of the High-Tech Park, including the introduction of a notification procedure for currency transactions, the cancellation of the mandatory written form of foreign trade transactions, the introduction of confirmation of the conducted operations by primary documents drawn up unilaterally. The Dutch government will implement the rules introduced by the 5MLD. The netherlands cryptocurrency exchange laws, cryptos might still fall within the scope of these definitions based on its specific traits and characteristics. Sign up for free newsletter. Retrieved 25 April Furthermore, the Dutch government is exploring whether current legal frameworks are sufficiently flexible cryotocurrency allow companies to make use of the opportunities provided by blockchain technology and whether it enables sufficient mitigation of relevant risks and issues. Companies dealing in virtual currencies must register with the Financial Transactions and Reports Analysis Centre of Canada Fintracimplement compliance cryptofurrency, keep the required records, report suspicious or terrorist-related transactions, and determine if any of their customers are "politically exposed persons. However, they are not illegal. The Jordan Times. Login to get access to our platform's unique features: Coin voting Commenting. The presence of crypto is strong here, and they have a good number of Cdyptocurrency ATMs and vendors which will accept the netherlands cryptocurrency exchange laws for both goods and services. The most relevant financial products in the context of defining cryptos are crypto investment objects, electronic money and financial instruments such as shares and bonds. Etelka Bogardi. Only virtual currency service providers that process funds or virtual currencies will fall within this new proposed regulatory ambit. National Bank of the Kyrgyz Republic. Adam B.