Tighter regulation in the Netherlands could lead to the closure of cryptocurrency companies

Dutch cryptocurrency companies are on the verge of closure due to new regulations— more stringent than required by AMLD5.

Small businesses are hit the hardest by the new rules.companies. Bittr exchange founder Ruben Waterman said last week that the platform would close by April 28 because small businesses do not have the funds to operate under the new rules. The Dutch National Bank (DNB) estimates that registering with the regulator alone costs $36,500, in addition to other costs.

“First of all, Bittr would have to appointspecial officer responsible for compliance with laws,” — Ruben wrote on Friday. “Who can I nominate? Myself? It doesn’t work when there’s only one person in the company.”

According to Dutch law,enterprises themselves must pay all costs associated with compliance. Ruben said that for him this means having to hire a lawyer, a law enforcement officer and find an intermediary to manage expenses in addition to the state registration fee. He said this was not possible given the small size of the firm.

In January of this year, the FifthEuropean Union Anti-Money Laundering Directive (AMLD5), and Dutch regulators, as previously planned, have begun regulating cryptocurrency companies under the new rules. However, DNB and the country's Ministry of Finance began to regulate firms even more strictly than required by AMLD5.

Cryptocurrency companies claim thatfinancial regulators have effectively created a licensing regime, while AMLD5 calls for simple registration of firms related to cryptocurrencies. In a parliamentary report dated April 21, Senator Bastiaan van Apeldoorn said that while cryptocurrencies were unlikely to be used for money laundering on the same scale as cash, they still require oversight.

“The phenomenon of cryptocurrencies exists in the futurewill take on even larger forms. Therefore, the industry needs to be adequately regulated to combat money laundering,” — Van Apeldoorn said.

New regulations were adopted in the middle of the month, but not everyone considers them adequate. Reuben Waterman writes:

“The Minister of Finance has changed some of the language,to fulfill the request of the Council of State, but did not actually change their content. The Senate raised questions regarding these rules, but nonetheless approved them. ”

Last week, the head of the Bitonic exchange, DaanDaan Kleiman wrote that the final regulation "addressed two of Bitonic's major concerns." The firm said the Central Bank and the Ministry of Finance had clarified the difference between licensing and registration, as well as the associated regulatory costs.

“We'll be watching this closely as the law comes into force, but the threat of an excessive and costly regulatory regime is not even on the table,” — writes Bitonic.

However, some firms did not wait for the decision of the regulators. For example, the Deribit cryptocurrency derivatives exchange “moved” earlier this year from the Netherlands to Panama due to new AML rules.

Cryptocurrency Fund Managing DirectorIcoinic Arthur Stolk said most firms are still waiting for a final regulatory assessment by the ministry of finance. Now the most difficult thing is for small companies, since the regulator requires the same costs from firms, regardless of their size.

“The problem is that in traditional finance,if you are regulated and licensed, the fee depends on the size and volume of the company. It's a fair deal. “We all pay the same,” — Stolk said.

Unlike many other countries, the Netherlandsare interested in the cryptocurrency industry. For example, last week the Central Bank of the Netherlands announced its readiness to develop a state-owned cryptocurrency to diversify the payments market.

</p></p>