Brussels has agreed on new rules for digital currency trading. For example, companies must be clearer about the risks for investors and they must apply for a licence. Insider trading is also prohibited. Yet there is also criticism.
The new rules were adopted by the European Parliament last week with a large majority. He thinks it is important to regulate the trade in digital coins more strictly.
European politicians point to various scandals in the crypto world. For example, FTX, Sam Bankman-Fried’s trading platform, went down last year. The company behind the stablecoin TerraUSD also went under. Politicians and regulators fear that many investors will lose their money due to these types of incidents.
That is why it has been agreed that every company that issues a new crypto coin must draw up a so-called white paper. It must state what the risks are for investors and how the technology behind the currency works. You can compare it to a prospectus that is issued when a company goes public.
Requirements for a permit
There will also be a licensing requirement for companies that offer crypto services, such as trading in digital currencies or storing credits. This permit is subject to requirements in the area of good governance, among other things. You must also make clear how your company is doing financially and you must have a complaints procedure. The platforms must also keep their funds within the EU.
Once you have obtained a permit from one Member State, you can offer your services in all EU Member States. Not all countries are happy with that. More on that later.
Incidentally, you must already have an official permit in the Netherlands to be able to offer crypto services. But to get such a permit, you now have to meet even fewer requirements than under the future rules.
Manipulation no longer allowed
In addition to protecting investors, the new law must also prevent crime and manipulation. For example, from now on it must be clear for each transaction which parties are involved in the fight against money laundering. Criminals regularly use digital currencies.
It also prohibits insider trading, as well as artificially inflating the price of a currency with false information and then selling that currency in large numbers.
The Dutch platform Bitvavo, which claims to be the largest in the Benelux, is delighted with the new rules. “It creates more confidence in the sector and reliable companies are distinguished from unreliable ones,” says a spokesperson. According to the company, this ensures a level playing field and better consumer protection.
It is not yet entirely clear when the new rules will take effect. But it will probably be sometime next year.
Companies can look for weak spots
Regulators are generally happy with the new law. Now they are only allowed to look at countering money laundering and terrorist financing, but not at protecting the estimated two million Dutch crypto investors, to the chagrin of De Nederlandsche Bank (DNB). The new rules therefore give supervisors more powers.
But there is also criticism. Some countries fear that crypto companies will look for the country where the requirements are least strict when applying for a license. After all, they only have to meet the requirements in one EU country to obtain a permit. Once you have a permit, you can work anywhere in the EU.
Furthermore, supervision will become the responsibility of national supervisors, while European rules are involved. Some countries, including the Netherlands, would have liked an overarching European body to monitor compliance with the rules. But our country got the short end of the stick there.
2023-04-29 03:03:06
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