International Crypto Regulation Is Necessary – Dutch Finance Minister

News, Regulation | March 12, 2018 By:

Dutch Minister of Finance Wopke Hoekstra has suggested an international approach to cryptocurrency regulation.

In a letter issued to the parliament, Hoekstra expressed concern about the significant percentage of Dutch citizens who had invested in bitcoin and other cryptocurrencies.

“Investing in cryptocurrencies is not without risk,” Hoekstra said. “In contrast to savings, money put into cryptocurrencies does not fall under a deposit guarantee system and there is generally no central issuer to claim from in the event of abuse.”

The finance minister wants to talk to credit card companies about warning consumers of the financial risks of buying cryptocurrencies on credit. He said new legislation must be introduced to improve transparency of cryptocurrency trading

He said that financial regulators are considering a ban on advertising “risky financial products” such as initial coin offerings (ICO) to retail investors, particularly given the large number of scams that pervade this burgeoning market.

“It is being investigated whether investors in ICOs can become just as good protected as investors with a normal IPO or bond issue,” said Hoekstra. “The current framework is not sufficient for this.”

The finance minister also warned that because cryptocurrencies can seamlessly move across borders, international cryptocurrency regulations will be necessary to truly combat the risks that they present to consumers and governments. He promised to work with other countries in the European Union and promote cooperative research to explore the cross-border nature of the crypto market.

In January, The Central Bank of the Netherlands (DNB) said it is against any nationwide crypto ban. The central bank noted that the decentralized nature of the cryptocurrency market would make it very difficult to impose any type of ban in a given country or region.

DNB also said that cryptocurrencies do not pose a financial stability risk. However, any sudden depreciation of the value of cryptocurrencies may lead to a significant harm to consumers. The central bank warned investors to be very cautious about their crypto investments because there is no safety net against any big loss, as the market is unregulated.