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Netherlands: Central Bank Statement on Virtual Currencies

(June 4, 2014) On May 8, 2014, in an item entitled “Virtual Currencies Are Not a Viable Alternative,” published in its news bulletin, the Bank of the Netherlands (DNB) put forward its stance on the Bitcoin and similar currencies. According to the DNB, “virtual currencies such as bitcoin are unlikely to replace the current financial system and money as we know it. Although media attention seems to suggest otherwise, the use of these currencies is as yet at a very low level.” (Virtual Currencies Are Not a Viable Alternative, DNBULLETIN (May 8, 2014).) While there were under 1,000 bitcoin transactions in the Netherlands in 2013, it stated, there are over 16 million payments a day in euro, the legal tender in the country. (Id.)

The statement went on to point out that “the [v]irtual currencies are not fully able to take up all the functions that money has, and market players in virtual currency systems provide only weak security guarantees. In addition, users run considerable risks when buying, spending, or receiving virtual currencies.” (Id.)

However, according to news reports, “neither the central bank nor any other official body has required any bitcoin-related businesses to obtain a license or face any type of official scrutiny,” and “the Netherlands shows big numbers for its size,” being “home to about 5 percent of the bitcoin ‘nodes’ … which “is not far off the rates for Germany, Britain, Canada and France, and more than China … .” (Carter Dougherty &Maud van Gaal, Bitcoin Grabs Dutch Fancy as Bankers Mull New Technology, BLOOMBERG (May 29, 2014).)

Moreover, Dutch banks are said to be very willing to do business with undertakings that focus on virtual currency, unlike the major banks in China and the United States, for example. The Dutch regulators, unlike their foreign counterparts, are not cracking down on big Bitcoin startups, and so those enterprises are setting up business in Amsterdam. (Id.) According to Jeroen Blokland, with the Rotterdam-based asset manager Robeco, the authorities have examined the potential for Bitcoin, and “[t]hey are willing to let this technological experiment unfold,” while at the same time they “are warning anyone who wants to use it as an investment to ‘be careful, be very careful.’ (Id.) In the view of Mark Buitenhek, global head of transaction services for ING Groep NV, “The Netherlands is among the absolute front runners” in Bitcoin, and “I think we will be and remain pioneers, just as bitcoin is rising very rapidly here compared to other countries.” (Id.)