The Netherlands Authority for the Financial Markets (AFM) raised “doubts” as to whether entities dealing in cryptocurrency conform to licensing laws, according to an official letter June 13.
In a letter sent to market participants looking to offer cryptocurrency investment opportunities, the regulator said the “risks” associated with them meant that such companies could fall short of any licensing obligations.
“The AFM has serious doubts, partly because of the risks associated with cryptos and their management,” the letter reads.
Cryptocurrency investment is not subject to regulation under the Netherlands’ Financial Supervision Act, but certain activities may require providers to obtain a licence from the AFM.
Assessing the current landscape, however, the authority claims it found “a (too) limited knowledge of these requirements for many market parties.”
“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,” it added, quoted by local news outlet Accountancy Van Morgen.
Earlier this month, the Netherlands’ central bank joined a growing consensus on blockchain’s current shortcomings, announcing the technology implementations available are “not sufficiently efficient” to service the banking sector.
Nonetheless, a government report released in May considered cryptocurrency to be broadly “low risk” in relation to financial stability.