The Dutch central bank, De Nederlandsche Bank (DNB), will start regulating all cryptocurrency-providers from January 10, 2020, it was announced on Tuesday. Following incoming European laws, the central bank will begin to impose regulations on companies that swap between crypto and fiat and offer crypto wallets. Dutch crypto-handling companies will need to register with the DNB, after which those running the companies “must be able to demonstrate that the processes are well organized against money laundering and terrorist financing”, with unregistered companies not allowed to offer cryptocurrency or wallet services.
No Surprise for Dutch Companies
The news will not come as a surprise to Dutch crypto operators as the DNB and the Dutch financial watchdog Autoriteit Financiële Markten (AFM) have been warning for some time about integrity issues related to crypto. The two organizations began talking about crypto regulation in January this year, with the central bank wanting to issue crypto licenses even earlier than 2020. The rules will not apply to blockchain applications like ABN Amro’s inventory management system but apply more to entities that “offer services for switching between virtual money…and ordinary money.”
Could The Netherlands’ Crypto Tax Breaks be Under Threat?
The new rules are part of an EU-wide operation, European anti-money laundering directive (AMLD5), which hopes to gain insight in crypto usage and traffic as the ecosystem and consequently usage grows. The law captures any “digital representation” that can be “transferred, stored and traded electronically”, with the rules not just applying to crypto but also to art and real estate among other asset classes. The Netherlands is one of the more crypto-friendly nations, with a generous €30,000 gains allowed before any tax is applied, and even then the tax rate is less than 2%. However, the enforcement of these new laws may suggest that the authorities are waking up to the growing presence of cryptocurrency and might soon realize that they are missing out by taxing so little.