There is a lot of debate and speculation as to whether or not cryptocurrency should be subjected to regulation. Around the world, nations have tackled the problem in a variety of ways. Most recently, the Netherlands opted to allow cryptocurrency trading to take place within the country on the condition that cryptocurrency firms responsible for a traded coin first obtain a license. The ongoing regulatory development in the cryptocurrency space is beginning to change.
De Nederlandsche Bank to Regulate Crypto Licensure
The Dutch legislature passed a law back in June that required the development of a cryptocurrency licensure system, which will come into effect in 2020. Upon the implementation of nationwide crypto regulation, it will also be required of all member countries residing within the EU to follow the crypto regulation laid out in the Netherlands.
The details of the new Dutch cryptocurrency licensing process remain vague, but for the time being the De Nederlandsche Bank appears to be the entity responsible for overseeing cryptocurrency licensure. The Bank has shown interest in blockchain technology since 2016, but January 2018 marked a key point in the development of the organization’s position on cryptocurrency.
The De Nederlandsche Bank has a concern about how cryptocurrency might still be incapable of working at a global level. However, the bank has continued to work on blockchain and crypto projects. The Dutch bank insists that banning the use of cryptocurrency is not an acceptable solution, but that users should be cautious when dabbling in digital coin currency trade.
Crypto Licenses Require Firms to Follow Key Rules
To be awarded a cryptocurrency license, a Dutch firm must fully comply with broad transparency regulations. The crypto firm will need to identify their customers, as well as monitor and report any suspected illicit behavior or unusual transactions.
Some issues may arise throughout this process, such as the anonymity of blockchain making it difficult for firms to gather information. However, licensing protocols are designed to mitigate the issues posed by cryptocurrency’s semi-anonymous nature. In the Netherlands, regulators are requiring that crypto firms provide a list of their customers. Only time will tell how effective the regulations will be in eradicating money laundering and fraud, but increasing transparency in volatile cryptocurrency markets will help mitigate some of the natural risks of investing in this market.
Regulation Brings Legitimacy to Crypto Markets
Now more than ever, the cryptocurrency markets could benefit from effective regulation. Regulation could provide the crypto market with the stability it needs to bring on major investors and decrease overall market volatility. Regulation of the crypto market will ensure additional stability and reduce the market’s volatility, making it more attractive to potential investors and users who have thus far held off due to concerns over the unstable market.
Cryptocurrency has sparked a valuation debate that is ongoing to this day, but it doesn’t appear as if this groundbreaking technology is going anywhere. Regulators around the world are coming around to the idea of integrating cryptocurrency and blockchain tech into their existing financial systems, and the Netherlands’ new licensing system is an interesting solution to a problem regulators around the world are wrestling with at this very moment.
The Halo Platform understands the importance of legitimizing cryptocurrency around the world. We have a comprehensive compliance program and dedicated staff who ensure adherence to current and new legislation. The Halo Platform and currency are shining examples of crypto done right in the world of emerging legitimacy.
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