According to Paul-Willem van Gerwen, the head of Capital Markets and Transparency Supervision at the Netherlands Authority for the Financial Markets (AFM), has asked that the market for crypto derivatives should be limited to wholesale. According to him, the reasons for this are not unknown, namely: lack of transparency, market manipulation and ‘other forms of criminal activity’.
Trade with risks
According to Van Gerwen, such crypto derivatives trading is currently considered risky trading. This is due to the fact that the market is less mature than other derivatives markets. A specific issue arising from the volatility of crypto products leads Van Gerwen to question whether “the parties to the derivatives transaction will be able to deliver on their promises.”
In addition, the AFM is of the opinion that operations with crypto derivatives should be limited to wholesalers.
The official acknowledged that, unlike its UK Financial Conduct Authority (FCA) counterparts, the AFM has not banned such trading, but hinted that it would certainly do so, saying:
“Don’t get carried away by the excitement of this trade, don’t be tempted into retail. Cryptos and their derivative tools are currently not suitable as a means of payment and/or investment.”
Impact of blockchain on clearing
According to Van Gerwen, the impact of blockchain technology on clearing was also an important topic. On this point, however, he was much more positive. For example, he recognized the benefits of using blockchain in clearing operations. However, he was still somewhat cautious when commenting on the potential role of the industry. He said the following about this:
“In principle, traders for their own account do not interfere with clearing. And yet, technological developments could lead to a situation where a peer-to-peer model emerges, where traders may start clearing for their own account.”