The Netherlands Authority for the Financial Markets (AFM) demands restrictive measures on bitcoin and altcoins investment and betting on the price of bitcoin when banking firms are warning that a bitcoin bubble could dwarf the 1600s Dutch tulip mania.
In an interview with local media outlet de Volksrant, Merel van Vroonhoven, the Chairwoman of the AFM, affirmed that while the Authority does not have the potential to halt cryptocurrency investment, it can ban “exotic products,” including binary options. These enable customers to bet on the price of bitcoin. According to Ms. Van Vroonhoven such a ban might be imminent, owing to growing concerns over the risks products of this nature pose to customers.
Citing a recent study, the Financial Official said that between 74 and 89% of all customers of binary options platforms are losing money with those products, falling short of calculating the risks well in advance.
“Investment products are not a game, and bitcoin is not a game.”
The AFM Chairwoman expressed her concerns that the difference between binary options and gambling is thinning, and it might disappear completely to members of the younger generation. She further brought to notice that customers are usually targeted with techniques that very much resemble the online gambling industry’s approaches.
The AFM has warned cryptocurrency investors and binary options customers on diverse occasions over the years, specifically over the preceding several months and weeks when concerns over an eventual burst of the bitcoin bubble got intense.
Kansspelautoriteit ’s Stance on Cryptocurrency Investment
Following requests and inquiries, the Dutch Gambling Authority clarified its own involvement in cryptocurrency investment regulation last week. In a statement, the regulatory body pointed out that it had no role in the regulation of the activity. Kansspelautoriteit further explained that under the country’s current gambling regulations, investment in bitcoin and other virtual currencies does not represent gambling.
The regulator determined its role in the regulation of cryptocurrency investment, or rather its lack of a role, after comprehensive research of the essence of the activity. Kansspelautoriteit pointed out that it was not before it had looked carefully into virtual currencies and the technology behind them that it was able to determine its participation in regulating an activity which is currently very difficult to regulate not only in the Netherlands but also across the globe.
At the time of writing bitcoin’s price stands at $11,034.88, down from its December all-time high of $19,343.04.
In a research letter to bitcoin investors, banking firm Goldman Sachs joined the pack of analysts and financial institutions warning about the risks of cryptocurrency investment. The bank generally praised the technology that powers bitcoin and altcoins, as it offers easy global execution, lower costs of transactions, traceability of all transactions, and so no. However, it pointed out that bitcoin currently does not provide any of these benefits.
