By George Ward
The Dutch Central Bank has called for a comprehensive set of regulations for the crypto industry. According to the institution, digital currencies are affecting the operations of monetary establishments globally. Meanwhile, this comes after the central bank researched the development of crypto and policies for the sector.
Proper Regulation Needer For Cryptos – DNB
In a recent study, Olaf Sleijpen and Steven Maijoor talked about regulating the crypto sector. Both are De Nederlandsche Bank’s (DNB) Executive Board members.
The executives published a study on crypto assets evolution and policy response. According to them, BTC, USDT, and other cryptos are affecting the objectives and tasks of central banks worldwide.
Meanwhile, in a recent article on crypto regulations, the central bank said crypto assets are risky.
“The crypto sector has received less hype in the last six months. This is due to the high-interest rates, cyber-crimes and investment fraud that have plagued the sector. However, international authorities must stand up and regulate the sector,” the article stated.
Furthermore, the central bank emphasized that it is essential for countries to agree on global regulations for crypto. The bank stated that effective laws would allow entities to leverage the benefits of such assets.
The DNB acknowledged that crypto has good qualities. One of them is its decentralized nature which removes the need for a third party.
The institution said that crypto poses severe risks to financial institutions. Hence, it is crucial to focus on regulating the sector.
The research authors also stated that unbacked digital currencies like BTC are unsuitable as money. Hence, Bitcoin cannot function as a payment method or store of wealth. In addition, they cited the high price volatility associated with the flagship currency.
Stablecoins Suitable As A Payment Method – Dutch Central Bank
The authors highlighted other factors besides the lack of assets backing Bitcoin. This includes a large number of crypto, which makes pricing very difficult.
However, the DNB said stablecoins would be a better option as other assets back it. Most stablecoins are collateralized by assets such as USD, EURO, etc.
Moreover, stablecoins also offer other benefits, such as the decentralized settlement of transactions. Additionally, individuals can use them for cheaper and faster cross-border payments.
Unfortunately, the central bank argued that they needed appropriate regulations. The aim is to ensure they do not threaten a country’s financial stability.
According to the Dutch central bank, new regulations in the EU, such as the MiCA (Markets in Crypto-Assets Regulation) bill, differentiates between unbacked and backed cryptos.
In addition, the bill proposes requirements for market participants and issuers. However, the financial entity stated that supervision, regulations, and laws would not help to reduce crypto-related risks.
The Dutch institution argued that crypto is international. Hence, the crypto industry needs comprehensive global regulation. Meanwhile, the agency would strive to contribute to crypto regulation alongside global financial regulators.