Dutch Crypto Oversight Drives Companies Away?
The Dutch Financial Markets Authority (AFM) is the primary regulator for the cryptocurrency market in the Netherlands. In a recent news-item as reported by BNR, it seems that the costs and administrative burdens associated with obtaining and maintaining a license in the Netherlands are significantly higher than in other European countries. This is potentially deterring many crypto companies, from entering or remaining in the Dutch market.
The New Markets in Crypto-Assets Regulation (MiCAR) presents a significant opportunity for crypto companies to gain a European passport, allowing them to operate throughout the EU under a single license. This regulatory framework could streamline cross-border operations for these companies, enhancing their market accessibility.
However, despite the benefits of a European passport, establishing operations in the Netherlands may not be the most strategic choice for crypto companies. The Netherlands seems to impose comparatively high supervision costs on crypto companies. This financial burden, coupled with the lack of influence that companies have over the cost-efficiency and - effectiveness of the regulatory bodies, could deter some from choosing the Netherlands as their base of operations.
While the argument that supervision benefits the financial sector is valid, the financial burden on the cryptosector could lead to a disconnect between the companies and the regulatory bodies, potentially hindering the realisation of MiCAR's full potential in the Netherlands and a thriving Fintech environment.
Next to the high supervision costs, crypto companies also face a relatively strict and tough stance from the Dutch Supervisors. Given the risks associated with crypto-assets, particularly from the perspective of retail investors, these assets suffer from inherent shortcomings related to stability, efficiency, accountability, and integrity, as demonstrated by the recent BIS report (July 2023).
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