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Dutch Central Bank orders crypto firms to register or cease operations

Dutch Central Banks seems ready to test CBDCs

De Nederlandsche Bank (DNB), the Dutch Central Bank, said in its official statement on May 6 that all cryptocurrency companies must register with the authority by May 18. Failure to register allows the authority to force the companies to stop operating instantly.

DNB has now enforced the Dutch anti-money laundering (AML) laws passed in April by the Dutch Parliament. The new regulations were passed to comply with the Fourth Anti-Money Laundering Directive (AMLD4) laws.

These Dutch AML laws comply with the Financial Action Task Force-recommended AML standards and directives. The Dutch Upper House amended the AMLD4 laws on April 21.

Based on that amendment, the new law states that companies that provide services to change fiat and crypto and crypto custody services must cease operations if they fail to register with the central bank by the deadline.

The report never explained why the Dutch Central Bank cited the European’s AMLD4 instead of the most recent AMLD5 directive.

A draft application is enough to fulfill registration requirements by May 18, according to DNB’s announcement. The two-week notice may have come since the Dutch Parliament did not enhance its AML laws until April 21.

The European Union (EU) released its fifth EU AMLD in September 2019. All EU members had until early January 2020 to implement the directive.

DNB aims to lead in CBDC development in Europe

DNB announced in its bulletin that it wants to leads in the creation of central bank digital currencies (CBDCs) globally. The CBDC topic has gained more public exposure in the Netherlands than in other countries in the Eurozone, according to the report.

The bank has a positive outlook on CBDCs. It is convinced that central bank money is critical to preserve since people need to maintain trust in the monetary system.

The European Central Bank (ECB) previously showed interest in launching a digital Euro. At the time ECB said that they have been conducting theoretical research and practical experimentation. The Netherlands could be a great testing ground for its digital Euro, according to the ECB report.

The DNB confirmed that it is ready to play a leading role after evaluating possible risks associated with CBDCs. The central bank insisted that the use of cash is dwindling in the Netherlands. It said that the citizens are using the less central bank-issued currency for transactions.

A CBDC may bring more diversity in the payments market and making cross-border payments to operate more efficiently, according to the bank.

ECB encourages strict regulations for stablecoins

The European Central Bank focused on highlighting the need for clear regulatory parameters for stablecoins in its extensive report on global stablecoins. The report also discussed the risks stablecoins might pose to financial stability.

The ECB suggests that a major regulatory framework must be set up to address the possible risks before benefits could be explored.

Stablecoins could potentially enhance the efficiency of the financial industry, according to the European Central Bank. The stablecoins may also improve access to financial services throughout the world.

Stablecoins may offer an alternative to volatile cryptos such as Bitcoin. The report reads:

“A typical stablecoin arrangement (made up of the coin itself and the associated transfer platform and ancillary functions) seeks to reduce price volatility by anchoring the coin to a “safe” low-volatility reference asset or basket of assets.”

If DNB succeeds in the launch of a CBDC, it may accelerate the rate of crypto and digital assets adoption.

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