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Dutch Financial Oversight Authority Has ‘Doubts’ Over Crypto Funding Conformity

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Cointelegraph reports that the Netherlands Authority for Monetary Markets (AFM) has raised “doubts” over entities dealing in cryptocurrencies, and whether they are adhering to licensing regulations.

In a letter addressed to crypto enthusiasts, the regulator mentioned the dangers:

The AFM has critical doubts, partially on account of the dangers and risks related to cryptos and their control.

Although crypto investments are not under any regulation in Netherlands with regards to the Netherlands’ Financial Supervision Act, some specific instances would require licensing by the AFM.

The authority says that after a thorough assessment of the present situation in the market, it discovered that there is limited knowledge of the requirements for market operatives.

In combination with the risks associated with cryptos, the AFM has serious doubts whether managers of investment institutions in cryptos can meet the requirements for licensing.

– The authority added, as reported by by local news outlet Accountancy Van Morgen.

At the start of the year, the authority called for restrictive measures on Bitcoin and altcoin investment and price speculation. The authority banned binary options at the time for allowing customers to bet on the price of Bitcoin.

Call for International Coordination

At the start of the month, the Netherlands’ central bank joined a growing list of other central banks that are cautious about blockchain technology. The bank said that the available implementations are not not sufficiently efficient to service the banking sector as yet.

Despite the cautious perspective taken by the central bank with regards to blockchain, a government report released in May considered cryptocurrency to be broadly low risk in terms of financial stability. The stance by the Netherlands has also been taken by Germany, whose financial regulator recently said that cryptocurrencies pose no threat to the country’s financial stability.

The letter sent to the crypto market players by AFM is also relevant for future managers of investment institutions in cryptocurrencies, it says. The regulator points out that different financial supervisors from all over the world have pointed out the risks associated with crypto and ICOs. The letter cites vulnerability to fraud, manipulation, poor valuation, money laundering and other forms of criminal activity as some of the negative aspects that have been associated with crypto. The AFM says that it will collaborate with other international regulators such as the European Securities and Markets Authority (ESMA) to ensure that crypto worshippers adhere to the law. The regulator also said that it is involved in efforts of IOSCO (International Organization of Securities Commissions), the joint venture of securities regulators worldwide.

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