A Dutch regulator acknowledged that the crypto derivatives market needs to be restricted to wholesale commerce. The causes are usually not unfamiliar — lack of transparency, market manipulation and “other forms of criminal activity.”
On May 12, the pinnacle of Capital Markets and Transparency Supervision on the Dutch Authority for Financial Markets (AFM), Paul-Willem van Gerwen, shared his opinion on the crypto derivatives commerce on the Amsterdam Propriety Traders Managers Meeting.
Van Gerwen highlighted, that regardless of (or maybe due to) the market’s rising curiosity in crypto derivatives buying and selling, the AFM “do regard such trade as entailing risks” and think about this market to be not as mature as the opposite derivatives markets. A particular drawback arising from the volatility of the crypto merchandise, based on van Gerwen, results in a query of whether or not “the parties to the derivative transaction will be in a position to fulfill their promises.”
Hence, the AFM believes that operations with crypto derivatives needs to be restricted to the wholesale commerce. The official acknowledged that, in contrast to its British counterparts from the Financial Conduct Authority (FCA), the AFM has not banned such commerce, however alluded that it certainly may accomplish that:
“Don’t get caught up in the excitement of this trading, don’t let yourself be tempted into retail trading.”
He additionally added, “Cryptos and derived tools aren’t yet suitable as a means of payment and/or investment.”
Another matter van Gerwen talked about in his speech was the distributed ledger’s impression on clearing. At this he sounded way more optimistic, acknowledging the benefits of utilizing the blockchain in clearing operations, however, but once more, was cautious whereas commenting on the business’s attainable position:
“In principle proprietary traders don’t get involved in clearing. And yet the technological developments could lead to a situation in which a peer-2-peer model arises, with proprietary traders possibly starting to engage in clearing themselves.”
Further studying: Binance reportedly halts crypto derivatives service in Spain
The speaker inspired the attendees to participate in DLT pilot instances that the Dutch monetary authorities are managing in a sandbox surroundings.
In August 2021 the central financial institution of the Netherlands issued a warning to Binance for providing crypto companies with out the required authorized registration.