The Netherlands intends to implement a licensing system designed to put an end to anonymous buying and selling of cryptocurrencies within the country’s limits.
Dutch financial authorities are reportedly looking to introduce new legislation aimed to fight the anonymity currently inherent to cryptocurrency transactions. The country is considering forcing all crypto exchanges and wallet providers to apply for a special license and punish those who operate without permission.
In particular, the Netherlands Authority for the Financial Markets (AFM) and the National Central Bank (De Nederlandsche Bank), recommended such measures to the Finance Minister Wopke Hoekstra. The minister was quick to respond and pledged to listen to the suggestions and is considering a licensing system.
With this latest move, which some already see as a step backward, the Netherlands intends to put an end to further anonymous crypto selling or buying. This development comes as no surprise given that Hoekstra has previously raised similar concerns and discussed the general issue of permits in the crypto sector. Now, national regulators seem to be more eager to provide the minister with a more detailed plan of such licensing.
Hype Gone, Questions Remain
It should be noted though that the response has come a bit too late. These concerns should have been a far more pressing issue previously, at the height of the crypto boom in 2017.
During this time, droves of unsophisticated investors rushed into the crypto market. These inexperienced and often first-time investors ran a high risk of losses, mostly due to fraudsters and naivety. Amid the market downturn, many of these same amateur participants left the market, thus the need for the consumers’ protection has become less urgent.
However, it is still necessary to fight against money laundering and terrorist financing — a task which is becoming a primary focus for regulators.
[bctt tweet=”The data from the Financial Intelligence Unit (FIU) of the Netherland police revealed that as of the beginning of last year, the number of “unusual” transactions with digital cons exploded—from an average 300 to nearly 5,000 a year.” username=”beincrypto”]
Such activity justifies the EU’s decision to issue a directive aimed at digital assets. The document states that all cryptocurrency trading platforms providing fiat-to-crypto services must follow the same Anti-Money Laundering (AML) laws as traditional financial institutions do. The same requirements also apply to digital wallet providers.
Platforms must also monitor and keep track of all transactions and report suspicious ones to the local authorities, and will be required to collect and store data of all their customers and provide it to the authorities on upon request.
What About Anonymity?
Apparently, the Netherlands has chosen these measures to respond to the EU rules urging to crack down on the crypto space. If approved, the new licensing system would mean that crypto exchanges and wallet providers will be able to obtain a license only if they can also confirm their ability to collect and store their customers’ personal data.
Meanwhile, most active crypto proponents claim that this move represents an infringement of the core values of blockchain technology, including a right to privacy and anonymity. Moreover, new rules might become a big challenge for startups since they demand so much record-keeping and a greater financial investment.
It is still unclear if this personal information could be protected sufficiently enough from theft by outside parties or misuse by the parties which are collecting the data.
Do you believe market safety ranks above personal privacy? Let us know your thoughts in the comments below!