The Dutch Authority for the Financial Markets (AFM) has announced that it will maintain its tough stance towards the digital assets sector despite looser European rules.
The Chair of the agency, Laura van Geest, noted that most countries in the West are tightening the reins on crypto, but a total ban is difficult to imagine.
Despite the less strict upcoming regulations under the EU’s Markets in Crypto Assets (MiCA) legislation, the AFM does not believe that cryptos are good news and has highlighted their flaws, including their vulnerability to deception, fraud and manipulation.
The number of crypto owners in the Netherlands is just under 2 million, according to AFM’s own estimates, with most investing less than €1,000.
Van Geest also acknowledged that the link between the crypto world and the traditional financial sector in the country is still limited. EU institutions and member states agreed on MiCA last year, which introduces rules for crypto service providers across the bloc.
Regulatory approval is needed to operate in the common market
Under MiCA, crypto service providers will need regulatory approval to operate in the common market. The head of the Dutch financial authority insisted that the agency would not drop its supervision to the lowest level to compete with other countries.
The Netherlands is taking this path, even if it means some companies will attempt to enter the Dutch market through a different European jurisdiction.
Van Geest warned of the risks involved with cryptocurrencies, citing their vulnerability to deception, fraud, and manipulation. She also pointed out that the value of crypto assets is mainly based on speculation, and their prices can fluctuate considerably.
As Van Geest emphasizes the risks of cryptocurrencies, Belgium’s former Finance Minister, Johan Van Overtveldt, has urged governments to ban cryptocurrencies altogether.
He cited the current banking crisis involving the collapse of two crypto-friendly banks. The AFM’s tough stance is likely to reassure investors in the Netherlands, as it ensures that crypto service providers operate within a tightly regulated market.