Last year, the bill for crypto under the name Markets in Crypto Assets (MiCA) was announced. The law is intended to officially come into force sometime in 2024, and the Dutch policymaker Authority in the Financial Markets (AFM) does not intend to compromise.
AFM compares crypto to tulip mania
This is what AFM chairman Laura van Geest writes in an blog article on the policy maker’s website. She describes how financial innovation leads time and time again to creative ones ways to exploit this. At the time of the VOC, merchants took out loans on the value of their VOC shares. And many (wealthy) Dutch people lost a lot of money due to the Tulip Mania.
“New business is welcome – you don’t want to break every flower in the bud,” writes van Geest. This also applies to her crypto. The young market although very risky, it also offers new opportunities. The task of regulators is to navigate, she believes. Moreover, legislation could be counterproductive by creating a kind of false security, which is why a middle ground is important.
According to the chairman of the board, that middle ground is also necessary, because in the Netherlands you cannot simply ban things such as crypto, as has been done in China and Saudi Arabia, for example. The Netherlands is an open society.
AFM remains skeptical and distant
Nevertheless, the AFM keeps its distance from cryptocurrencies, the top woman emphasizes:
In the period without a mandate, we as the AFM have always opted for discouragement. We found and do not think cryptos are good news. They are difficult to fathom, vulnerable to deception, fraud and manipulation. The value is mainly based on speculation and as a rule there is no underlying value. Prices can therefore fluctuate considerably, small news can lead to major price changes. And let’s not even talk about the huge ones [klimaat]footprint of bitcoin.
The institute is clearly concerned, and is not prepared to loosen the reins once the new legislation takes effect. That legislation will be called Markets in Crypto Assets Regulation (MiCAR) by then. According to the AFM, it is worrying that it cannot be made impossible to completely ban crypto for certain parties, and that crypto exchanges are not required to issue transaction reports. Lending coins is also not yet covered by MiCAR.
She also emphasizes that the exposure is still relatively low. Although just under 2 million Dutch people (around 12% of the population) have cryptocurrencies, the majority speculates with less than 1000 euros, according to the AFM. Also, hardly anyone invests with borrowed money, and the link between the crypto sector and the rest of the financial world is still limited.