Regulation
Cryptocurrency Regulation in the Netherlands 2024
The Netherlands is considered a financial hub of Europe. It is one of the few countries with a clear stance on cryptocurrencies. The Dutch Central Bank defines cryptocurrencies as digital representatives of value that are not issued by a central bank or public authority. According to the bank’s current cryptocurrency policy, these digital assets are not legally recognized as currency, but are accepted by individuals and businesses for electronic exchange, storage, and trading.
Here we explore the cryptocurrency regulatory framework in the Netherlands. This exploration is crucial, as it can reveal where this advanced economy is heading at the moment.
1. Cryptocurrency Regulation in the Netherlands: A General Overview
There are no serious restrictions for cryptocurrency transactions in the Netherlands. This policy makes the country an attractive destination for virtual asset service providers (VASPs). This does not mean that the cryptocurrency sector is a gray area. In 2020, the country ratified the Dutch Implementation Act, which aligned with the European Union’s fifth Anti-Money Laundering Directive (AMLD5).
According to the development, cryptocurrency exchanges and digital wallet providers should register with the Dutch Central Bank (DNB). By registering, companies are subject to the supervision of the DNB. The authority ensures that registered companies comply with the Anti-Money Laundering and Anti-Terrorism Act (Wwft). Monitoring unusual transactions and conducting criminal background checks on customers are the main strategies used by the authority to ensure compliance of companies registered with it.
2. Cryptocurrency Regulation in the Netherlands: What’s New
January 22, 2024: The Ministry of Finance launches consultations on the Regulation on Cryptocurrency Markets and the Regulation on Information on Cryptocurrency Transfers and Money Transfers.
January 30, 2024: Cryptocurrency Exchange bitpanda
bitpanda support@bitpanda.com Centralized Exchange
announces it will expel Dutch residents due to regulatory compliance issues.
February 8, 2024: kraken
kraken support@kraken.com Centralized Exchange
obtains registration as a Virtual Asset Service Provider from the DNB.
February 16, 2024: bybit
bybit Centralised ExchangeCryptocurrency Trading and Information
announces its intention to open an office in Amsterdam through a strategic partnership with SATOS, a DNB-authorized and recognized VASP.
March 13, 2024: DNB fines Crypto.com €2.85 million for operating without registration from May 2020 to November 2022.
March 28, 2024: Bybit launches its digital asset platform, Bybit.nl, in the Netherlands. The platform provides regulated cryptocurrency trading and educational resources.
June 3, 2024: ok
okex Centralized Exchange
launches its cryptocurrency exchange and Web 3 wallet in the Netherlands. Integrates local payment system iDeal.
3. Status of cryptocurrency regulation in the main areas of activity in the Netherlands
In the Netherlands, the regulation of the main cryptocurrency-related activities (exchange, custody, lending and staking) is partly governed by specific laws and guidelines.
Case: Custodial wallet providers must register with the Dutch Central Bank if they offer their services in or from the Netherlands.
Exchange: Cryptocurrency exchanges are also required to register with the DNB, as per the 2020 development. In particular, exchanges that only facilitate crypto-to-crypto exchanges are not required to register.
Lending and Staking: These two activities are still somewhat grey areas, as they are largely unregulated. The borrowing could fall under consumer credit regulations and the yield could fall under mutual fund regulations. However, no formal announcements on these issues have yet been made by the relevant Dutch authorities, such as the AFM and DNB.
4. Explanation of the regulatory framework for cryptocurrency taxation in the Netherlands
In the Netherlands, cryptocurrency is taxed as an asset. The country’s tax system underwent a major change in 2022. Under the new tax system, an assumed return is applied to assets, assuming a fixed return regardless of actual income. This approach is different from countries that tax cryptocurrencies as property, where gains or losses are only realized at the time of trading.
Every January 1st, the taxable base of a person’s assets is reset to zero and the wealth tax is calculated based on the presumed return on the assets of the previous year.
In the meantime, cryptography professionals are taxed differently. Their earnings are considered regular income and are taxed according to the income tax rates, which are 36.93% up to 73,031 euros and 49.50% above that amount.
For companiesall cryptocurrency-related income is included in the calculation of taxable profit. Corporate tax rates in 2023 start at 19% for the first 200,000 euros of profit, increasing to 25.8% for amounts above that threshold.
5. Cryptocurrency Mining in the Netherlands: What You Should Know
Cryptocurrency mining is not illegal in the Netherlands. The country has a very strong crypto mining community. It also boasts a very advanced crypto mining infrastructure. The tax rules for cryptocurrency mining in the country depend on whether the crypto mining activity is carried out as a commercial activity or not.
In the Netherlands, a person’s taxable income is generally divided into three categories:
- Box 1: Income from work and home ownership
- Box 2: Substantial interest income
- Box 3: Income from savings and investments
If cryptocurrency mining is part of a business activity, the income is taxed under Box 1. If mining is not considered a business activity, the income is treated under Box 3, as it is considered a business.
6. Timeline of the evolution of cryptocurrency regulation in the Netherlands
Here is the timeline of the evolution of cryptocurrency regulation in the Netherlands:
2018: DNB states that cryptocurrencies do not play the role of money and have no implications for monetary policy. The same year, the Dutch Finance Minister in parliament took a political stance in favor of the concept of cryptocurrency regulation, as opposed to a cryptocurrency ban.
2020: The country amends the law on the prevention of money laundering and terrorist financing (Wwft) to align it with the fifth European directive against money laundering and terrorist financing (AMLD5).
2023: The International Organisations of Securities Commissions (IOSCO) opens a consultation on proposed recommendations for the regulation of crypto-assets. In the same year, the DBA published the Sector Industry Baseline on Crypto-assets Service Providers (CASP).
2024: The Ministry of Finance launches consultations on the Regulation on Cryptocurrency Markets (MiCAR) and the Regulation on Information on Cryptocurrency Transfers and Money Transfers.
Final note
In the DNB’s view, the future of cryptocurrencies is uncertain. But it believes that cryptocurrencies are here to stay. Of course, the Netherlands recognizes that as the cryptocurrency market evolves, its regulatory framework must also adapt. There are reports that the country is planning to introduce new legislation to regulate the cryptocurrency sector.
Consumer protection and stability are the two main areas that the country’s future regulation will address. We can see that the cryptocurrency regulatory environment in the Netherlands is improving and is expected to improve in the coming years, thanks to the welcoming attitude of its government authority and the growing enthusiasm of its cryptocurrency community.
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