The Netherlands Bank is working with the Authority for the Financial Markets (AMF) to introduce rules for crypto exchanges, Klaas Knot, the president of the Dutch central bank said in a speech last week that was published on Monday. Currently, crypto assets do no pose a risk for financial stability, but state authorities should act because if the crypto market continues to grow, its vulnerability could become a significant problem.
The virtual coin financial space has serious issues with money laundering, investor protection guarantees, and market volatility, the Netherlands Bank head said during his appearance at a financial conference in Groningen on October 5. Knot called for a pan-European Union or international regulatory approach, but while it happens, the Netherlands should not stay away from the crypto industry.
However, one of the problems about overseeing crypto assets is that those financial instruments are global and boundless, so it is very complicated to regulate all players and services with only state measures, according to Knot. Another significant problem is determining which part of the digital coin industry comes under the scope of existing laws.
“Given the international character of cryptos, a global or European approach is needed. But that will take time. Meanwhile, we at the Dutch central bank are assessing the possibility, together with the Authority for the Financial Markets, of a proportional supervisory framework for cryptos.”
The regulatory approach should target digital currency exchanges as the existing legal provisions cover trading venue operations.
“After all, the main rationale for our supervision, underpinned by our legal mandate, is to safeguard the integrity and resilience of the financial system. The exchanges where cryptos are bought and sold are where the ‘new’ and the ‘old’ financial systems overlap, and where we will focus our supervisory efforts.”
Central banks around the world can use the crypto framework of the Financial Stability Board, Knot noted. The Dutch central bank president headed the FSB Committee that published a special virtual asset report last week.