CMS Expert Guide to Crypto Regulation in The Netherlands

Disclaimer: This chapter was last updated on 8 September 2023 and does not reflect any subsequent developments. The information provided is intended for general informational purposes and should not be construed as legal advice.

1. How is crypto regulated?

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Legislation

There is currently no specific legislation with respect to cryptoassets other than the Dutch implementation of the Fifth Anti-Money Laundering Directive (5MLD) in the Netherlands. The legal definitions of “custodian wallet providers” and “providers engaged in exchange services between virtual currencies and fiat currencies” are included in the Dutch Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme, (Wwft)).

Regulator

The Dutch Central Bank (De Nederlandsche Bank (DNB)).

Legislation

There is no specific crypto legislation in the Netherlands, other than the implementation of 5MLD in the Wwft.

The Dutch Financial Supervisory Act (FSA) would therefore only be applicable to cryptoassets if they qualify as a traditional financial instrument, such as a security.

Regulator

The Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, (AFM)).

2. Are the following activities regulated or unregulated in your jurisdiction? ― Exchange (buy/sell) ― Custody (hold) ― Borrowing/lending ― Yield/staking

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Custody (hold)

A cryptocurrency wallet is referred to in the Wwft as a ‘custodian wallet provider’ and is defined as “an entity that provides services to safeguard private cryptographic keys on behalf of its customers, to hold, store and transfer virtual currencies.” The definition has been derived from the 5MLD.

The Wwft defines a virtual currency as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically”. The definition has also been derived from the 5MLD.

Exchange (buy/sell)

A cryptocurrency exchange is referred to in the Wwft as “providers engaged in exchange services between virtual currencies and fiat currencies”. The definition has been derived from the 5MLD.

The providers of “custodian wallets” and “providers engaged in exchange services between virtual currencies and fiat currencies” provide regulated activities and must file a registration with DNB. The registration requirement applies to service providers who provide these services in a professional capacity or on a commercial basis in or from the Netherlands.

Entities that solely provide services for the exchange between virtual currencies are currently not obliged to register with DNB.

The activities (i) borrowing/lending and (ii) yield/staking regarding virtual currencies (as defined in the Wwft) are not regulated in the Netherlands, if this does not involve fiat currencies and/or the regulated activities mentioned above.

If a cryptoasset has the characteristics of a regulated investment under the FSA, e.g. a share in a company, then exchange and custody of that cryptoasset will likely entail regulated activities, such as dealing in investments and safeguarding investments.

The borrowing/lending of cryptoassets is not explicitly regulated in the Netherlands. It is arguable that the lending of cryptoassets to consumers could fall within the scope of consumer credit regulation, but the AFM or DNB does not appear to have sanctioned any firms or made any public announcements in this regard.

Yield/staking is a complicated area. Depending on the business model and detail of the transactions, it can be arguable either way that yield/staking is within scope of the collective investment scheme regulations. The AFM does not appear to have sanctioned any firms or made any public announcements in this regard. 

3. How long would establishing a cryptoasset business/obtaining a license in your jurisdiction take?

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In principle, the DNB decides on applications for registration within two months of receipt of a complete application. However, the actual application period depends on several factors, including the quality and completeness of the application.Processing times for applications under the FSA will vary from six months to a year depending on the activity requiring authorisation.

4. What would be the approximate overall cost of obtaining a licence?

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One-off charges apply to applications for registration as a crypto service provider and for fit and proper assessments:

  • Processing an application for registration as meant in Section 23b of the Wwft (including assessments as meant in Section 23h of the Wwft): EUR 6,300
  • Fit and proper assessments of natural persons, not in the context of a registration as meant in Section 23b of the Wwft:
    • Section 23h(1) of the Wwft (fitness): EUR 2,000;
    • Section 23h(2) and (4) of the Wwft (propriety): EUR 1,100.
    • Section 23h(3) of the Wwft (reputation): EUR 1,300.

Please note that an annual fee will be charged for regular supervision to all crypto service providers. 

The application fee will depend on the particular application.

5. What is the probability (%) of success in obtaining a licence?

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The probability of success depends on several factors, including the quality and completeness of the application.The probability of success depends on several factors, including the quality and completeness of the application.

6. What other limitations are there in your jurisdiction when looking to set up a cryptoasset business? E.g., Compliance requirements and physical presence

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Compliance

Crypto service providers must submit information on their organisation, including data evidencing compliance with the Wwft and the Sanctions Act. Under the Sanctions Act, DNB expects that crypto service providers verify whether the customer is indeed the owner of the wallet.

Testing of policymakers

As part of the registration process, all management board members, (co-) policymakers and supervisory board members must be assessed for fitness and propriety, while the holders of qualifying holdings (shares representing 10% or more of shares and/or voting rights) need to be assessed for propriety.

In order to apply for a fitness or propriety assessment, the online form ‘Initial assessment crypto service providers’ in the Digital Supervision Portal of DNB should be used.

Propriety assessment: DNB verifies whether the propriety of a candidate is beyond doubt, which involves ensuring their intentions, actions and antecedents do not stand in the way of performing their duties. In this respect, DNB primarily focuses on their antecedents.

Fitness assessment: When assessing fitness, DNB determines whether a candidate has sufficient relevant knowledge and skills, and displays the required professional behaviour to perform the job. DNB determines this based on their education, work experience and competencies.

Firms need to also comply with the wider rules and guidance under the FSA (in addition to the Wwft).
Portrait ofClair Wermers
Clair Wermers
Partner
Amsterdam
Portrait ofKarsten Bruinsma
Karsten Bruinsma
Advocaat
Amsterdam