Cryptocurrencies are still not accepted as digital money in the Netherlands. Petra Hielkema of the Dutch Central Bank says, “If something wants to be treated as money, you have to be able to spend, save and calculate with it […] So we do not consider it [cryptocurrency] to be money as such.” This means that virtual currencies in the Netherlands, as we already reported in our first Holland article (read here), are regarded as transferable assets and therefore as property. In the following text, you will find information on the general classifications of Bitcoin and Co. in Dutch financial law.
Point of view of the government
The government of the Netherlands does not want to prohibit virtual currencies per se, but it is striving to regulate them. Cryptocurrencies must adhere to the following four principles:
- The integrity of the financial system must be continuously guaranteed. One example of this would be to reduce the risks associated with money laundering.
- The technology behind digital currencies must be preserved and further improved. The user must not suffer any damage due to technical errors.
- Regulation must be created at international level as a reason of the cross-border nature of Bitcoin and Co. The Netherlands prefers a coordinated international approach to regulation and wants to play a leading role in defining a European and international strategy.
- Gaps in consumer and investor protection need to be closed. These measures should be proportionate to the risks to consumers and investors.
In addition to the preferred international strategy for regulating cryptocurrencies, national options should also be examined. To this end, the Dutch government is analysing the laws passed in other countries such as Japan, Germany and Switzerland in order to check whether such models would also work in the Netherlands. On the one hand, the government is anxious to minimize the risks associated with cryptocurrencies for the end user and, on the other hand, it wants to promote blockchain technologies with all their advantages. As a member of “J5”, the Netherlands takes on a pioneering role at the regulatory level – read more here.
Special case Security Token
Security tokens represent a special case in the crypto area; they can qualify either as securities or as investment objects. If this is the case, they will be regulated according to Dutch financial law. However, before a token qualifies as a security, the provider of that token must publish a prospectus in accordance with the relevant prospectus rules under Dutch law. The classification also has a direct influence on the legal basis for trading the token. For example, if a token is secured by assets, it may be classified as an investment object. Security tokens are issued in so-called Offerings (STOs) – depending on the degree of preparation of the offering entity, either a certain number of investors or a broad mass of small investors (publicly similar to ICOs) can participate in the offering. The advantages, disadvantages and differences to ICOs are not subject of this blog article.
Experiment of the National Bank
Since 2015, the Dutch National Bank (DNB) has been experimenting with its own cryptocurrency, the DNBCoin. It is not (yet) intended to circulate it, but rather serves as an internal learning project for a better understanding of blockchain technology. DNB’s interest also lies in the fact that blockchain technology can have an impact on the overall objective of financial stability and the three main tasks of DNB:
- Promoting the smooth functioning of the payment system
- Supervisory supervision
- Monetary policy
DNB’s willingness to experiment shows the importance and interest of large institutions in the development of the crypto market in general. Those institutions that are actively involved in the development are also those that will have the decisive advantage in the future. The basis: regulatory security in this environment must be guaranteed for a National Bank. The proof of origin of transactions based on money laundering checks and a correct tax basis are just two of the many points that make the cryptocurrency environment suitable for the masses.
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The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim neither correctness nor accuracy. For detailed information on crypto regulations we recommend contacting a certified legal advisor in the specific country.
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