Tuesday, February 7, 2023

Dutch Regulators Say Crypto Is Not Yet Suitable For Payments

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The dutch regulators say crypto is not yet suitable for payments and according to Paul Willem van Gerwen from AFM, retail investors should be cautious with derivatives trading so let’s find out more in our latest cryptocurrency news.

The Dutch regulators stated that the crypto derivatives market should get restricted to wholesale trade and the reasons are not unknown and include market manipulation, lack of transparency, and other forms of criminal activity. The head of Capital Markets and Transparency Supervision at the Dutch Authority for Financial Markets, Paul Willem van Gerwen, expressed his opinion during the Amsterdam Propriety Traders Managers Meeting.

Van Gerwen noted that despite the market’s rising interest in crypto derivatives trading, the Dutch regulators regard such trade as entailing risks and consider the market to be not as mature as the other markets. Another problem is the volatility of the crypto products which leads to the question of whether the parties to the transactions will be in a position to fulfill their promises. The AFM believes that operations with crypto derivatives should be restricted to the wholesale trade and the official noted that unlike the British counterparts from the FCA, the AFM hasn’t banned such trade but alluded that it could do so in the future:

“Don’t get caught up in the excitement of this trading, don’t let yourself be tempted into retail trading. Cryptos and derived tools aren’t yet suitable as a means of payment and/or investment.”


Another topic van Gerwen noted in his speech was the distributed leger’s impact on clearing. This sounds much more optimisic because of the advantages of the blockchain in clearing operations but was cautious while commenting on the possible role in the industry:

“In principle proprietary traders don’t get involved in clearing. And yet the technological developments could lead to a situation in which a peer-2-peer model arises, with proprietary traders possibly starting to engage in clearing themselves.”

The speaker encouraged the attendees to take part in the DLT pilot case that the Dutch Financial authorities managed in the sandbox environment. The central bank of the Netherlands issued a warning to Binance for offering services without legal registration.

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