The Netherlands new crypto exchange regulations

The Netherlands is likely to implement new crypto regulations per 10-1-2020 for all exchanges and wallet custodians. The new law regulates companies that are trading cryptocurrency and wallet providers. Under the new law these companies would have to fill a notice to the central bank, stating that they are performing these activities.
Note: It is not a ”crypto license”, but a ”notification”.

Exchanges are all virtual currency trading companies, brokerages and intermediaries that buy- and/or sell cryptocurrency to clients. Such as Bitstamp, Kraken and other similar exchanges.

Wallet providers are those who can store, transfer or manage the customer funds, this is only applicable if you hold the customers private keys. (Private keys are a code which gives the holder full access and ownership to the cryptocurrency).

Current status of the proposed amendment

The amendment is currently in the 3th stage (out of 5) (28-11-2019) of the amendment coming into effect as a law. On 2-7-2019 the amendment has been sent to the parliament.

The stages of a new law in the Netherlands

I. Preparation, which involved an open Internet consultation in which anyone was allowed to comment on the law.
II. Advisory of the “Raad van Staten”, which is the State Advisory Board.
III. Passing the law in parliament (Current stage)
IV. Passing the law in the senate
V. Publication of the law.

Regulatory situation in the Netherlands today

Currently crypto exchanges and wallet providers in the Netherlands do not require any registration or licensing from the central bank. Although it is highly recommended, and necessary to follow well structured know-your-customer and anti money laundering practices if you broker, buy or sell cryptocurrency.

Eurozone-Sepa

What would the regulations change for the onboarding process?

Wallet custodians and virtual currency trading companies need to identify their clients and manage the risk of money laundering by monitoring and reporting suspicious transactions.

The client identification process will be comparable to what some regulated Western crypto exchanges currently already ask from their clients, a copy of passport, a passport selfie, a proof of address, some declarations or proof as to the source of your income, and to declare what type of transactions you will have and for what reason. Depending on the limits you want to trade.

Some exchanges solve this by using new digital onboarding solutions to be able to quickly accept the clients. Clients can be identified by a live video conference in which the passport is checked by a compliance employee and compared to the person holding it. And so the identify of the client is confirmed. For higher limits of trade, additional documents may be requested.

Some exchanges require the client to upload documents until they are inspected by a compliance staff member. During certain busy periods in the crypto market, the onboarding time may take up to 2 weeks for some exchanges.

Quick summary of requirements proposed for registration with the Dutch Central Bank:

  • Fill in a notification form of your activity
  • Send all company legal documents, identification and resumes of owners
  • Send a business plan and compliance manual
  • To have managers / directors of demonstrable integrity and suitability
  • To have a transparent company structure
  • The regulator will monitor and test the integrity and may suspend the registration

  Compliance requirements (at least):

  • To have a compliance procedure for identification and monitoring of clients
  • To report unusual transactions
  • To have compliance staff follow an annual training
  • To make a industry based risk profile to identify higher-risk clients and transactions
  • To identify clients and ensure their funds are of legal origin

We expect, based on all the publications and comments to the proposed regulation, that the notification process will relatively simple and affordable.

How can Intercompany Solutions assist your crypto company?

We have years of experience in the cryptocurrency industry and we have advised and assisted (large) foreign crypto firms in setting up a cryptocurrency company in the Netherlands. We can assist you with all practical procedures and regulatory information to make your crypto business in the Netherlands successful.