A Dutch regulatory body says that cryptocurrencies are not yet suitable as a means of payment or investment

A Dutch regulatory body says that cryptocurrencies are not yet suitable as a means of payment or investment

A Dutch regulator stated that the crypto derivatives market should be limited to wholesale trading. The reasons are not unknown: lack of transparency, market manipulation and “other forms of criminal activity”.

On May 12, the Dutch Authority for Financial Markets (AFM) Head of Capital Markets Supervision and Transparency, Paul-Willem van Gerwen, shared his opinion on crypto derivatives trading at the Proprietary Traders Managers Meeting of Amsterdam.

Van Gerwen noted that despite (or perhaps because of) the growing market interest in cryptocurrency trading, the AFM “considers this type of trading to be risky” and believes that this market is not as mature as other markets. of derivatives. A specific issue stemming from the volatility of crypto products, according to van Gerwen, begs the question of whether “the parties to the derivatives transaction will be in a position to deliver on their promises.”

Therefore, the AFM believes that trading in crypto derivatives should be limited to wholesale trading. The official acknowledged that, unlike its UK counterparts in the Financial Conduct Authority (FCA), the AFM has not prohibited this type of trading, but hinted that it surely could:

“Don’t get caught up in the excitement of this trade, don’t be tempted by retail trading.”

He also added: “Cryptocurrencies and derivative tools are not yet suitable as a means of payment and/or investment.”

Another topic that van Gerwen mentioned in his speech was the impact of the distributed ledger on compensation. In this he sounded much more optimistic, acknowledging the advantages of using blockchain in clearing operations, but, once again, he was cautious in commenting on the possible role of the industry:

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“In principle, proprietary traders do not engage in clearing. However, technological developments could lead to a situation where a peer-2-peer model emerges, with proprietary traders possibly starting to engage in clearing themselves.”

The speaker encouraged the attendees to participate in the DLT pilot cases that the Dutch financial authorities are managing in a sandbox environment.

In August 2021, the central bank of the Netherlands issued a warning to Binance for offering cryptocurrency services without the required legal registration.

Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.

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Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.