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Pete Hoekstra, the finance minister of the Netherlands, received the official opinion that a licensing system for encryption services should be introduced, reports from the Dutch media Nederlandse Omroep Stichting (NOS) on 18 January.
Reportedly, Hoekstra requested cryptocurrency advice from the Financial Markets Authority and the local central bank, De Nederlandsche Bank, at the beginning of last year.
The minister announced that he started working on the advice immediately after receiving it. According to the article, the diminished crypto-speculative craze has made investor protection actions less urgent. As a consequence of this less urgency, it is stated that the emphasis is on the prevention of money laundering and terrorist financing through the crypt.
The Netherland Financial Intelligence Unit noted that the number of unusual transactions with cryptocurrencies increased from an average of 300 to up to 5,000 the year, reports from the NOS.
The proposed licensing system would, apparently, require cryptographic exchanges and payment service providers to monitor their clients' transactions and report suspicious activities to the authorities. The exchanges will also have to collect and store information about their customers in order to be able to deliver them to the authorities in case of an investigation.
The central bank of Netherland has announced that the companies will be tested before obtaining the license, for example to verify if they are able to collect the requested user data.
Richard Kohl, a member of the board of directors of the Bitcoin Nederland Foundation, stated that the measure is "dramatic for young innovative companies", defining the new regulations a big step back in the culture of local innovation.
The article reports that it expects the new regulation to bring large amounts of paperwork and huge expenses to companies to maintain compliance. All this, according to Kohl, will cause serious competitive disadvantages compared to large established parties such as banks.
Reportedly, Kohl also stated that little research has been done on the actual dangers of cryptocurrencies and that the measures taken are too extreme. He also stressed his concerns about other possible consequences of the requirement for storing user data:
"Banks and financial institutions must already track customer and transaction information […] you may wonder if our personal information is protected and used, for example how the Chinese government wants to be able to follow all the transactions of all citizens ".
As Cointelegraph reported in December last year, cryptocurrency service providers will soon have to obtain a license from the central bank of the Netherlands.
In August 2018, news broke that a Dutch central bank executive had said that while cryptocurrencies are not "real money", the bank does not intend to ban them.
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