Dutch AFM official prepares to ban retail digital currency derivatives


The Dutch Financial Markets Authority (Autoriteit Financiële Markten or AFM) may be preparing to ban retail investors from trading digital currency derivatives. That’s according to recent comments from Paul-Willem van Gerwen, a senior official at the Dutch financial markets regulator.

In a speech at the Amsterdam Property Traders Managers Meeting, Gerwen spoke about the rise and impact of digital currency derivatives. He noted that the instrument has become very popular among asset managers who consider it “very exciting”.

However, the official, who heads the AFM’s capital markets and transparency oversight unit, told officials the regulator did not share their sentiment. The AFM considers that digital assets present risks such as “lack of transparency, manipulation and other forms of criminal activity”.

He also noted that market volatility also carries risks. Gerwen warned that asset managers should not get into offering the instrument to retail investors. The Netherlands could consider following in the footsteps of the UK’s Financial Conduct Authority (FCA) if it deemed the move necessary, he added.

“I maintain that crypto derivatives trading should be limited to wholesale trading…Don’t get carried away with the excitement of this trading, don’t get tempted by retail trading,” Gerwen said.

Gerwen’s comments come after the Dutch financial market regulator warned market participants of the risks associated with digital currency trading in general. The AFM noted that its authority over the industry is limited; therefore, investors will have to bear the losses that they have not corrected.

The future of the Dutch digital currency industry remains uncertain

Notably, the AFM has been issuing warnings to retail investors about digital currencies since 2017. A proper regulatory framework has also not been established for the industry, and the Netherlands has even toyed with the idea of an outright ban.

The Netherlands also supports the European Crypto Asset Markets (MiCA). According to a Financial Times report, the law could potentially give the AFM more oversight powers over the digital currency market.

However, digital currencies still enjoy the support of several government officials. These include Dutch Finance Minister Wopke Hoekstra, who opined that the Netherlands would be better off regulating the industry than outright banning it.

“My observation now is that surveillance is more effective than a total ban in the Netherlands,” he said last year.

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