Regulatory Officer Says Digital Assets Still Unsuitable for Investments or Settlements

Netherlands-Based Financial Markets 

A senior official at the Netherlands Authority for the Financial Markets (AFM), Paul-Willem van Gerwen, said that individual investors should avoid buying, selling, or investing in digital assets derivatives. He opined that the derivatives aspect of the cryptocurrency market should only be available for institutional investors in wholesale transactions.

Van Gerwen’s reasons for his comments are along the same lines as many past similar opinions. He says that he is wary of the absence of transparency in the markets and the ability of an individual or entity to manipulate the markets. The official also highlighted the risk of criminals using digital assets to finance their scrupulous activities.

Van Gerwen opined that he considers the cryptocurrency derivatives market unsuitable and highly risky for individual investors. The official argued that digital asset derivatives should be available only under wholesale market conditions.

The AFM executive announced the AFM’s stance while giving a speech at a conference of managers of proprietary traders in the country. He reaffirmed that his nation hasn’t yet outlawed trading in digital assets derivatives like the United Kingdom. However, he said that the Netherlands could do so.

He added that digital assets are yet to become suitable for use as instruments for making settlements or financial investments. Moreover, Van Gerwen also addressed the effect of distributed ledgers on the efficiency of clearing operations in the country.

When speaking about the blockchain-type distributed ledger technology, Van Gerwen appeared optimistic as he admitted to the prospects of utilizing blockchain-based technologies in making clearing activities more efficient. Van Gerwen said he hoped to witness more research work that exploited blockchain technology’s ability to reduce trading and investment costs.

However, he maintained that the digital asset industry would always require centralized regulation to protect deals from common risks. Last August, the Netherlands’ central bank sent a warning to Binance, challenging it for offering virtual asset trading and investment services in the nation without the government’s approval.

Binance Moves to Increase Reach in Europe Amidst Growing Regulations

Meanwhile, Binance, one of the most renowned virtual asset trading platforms globally, has continued to expand its reach across Europe in 2022. Earlier this month, the company recently established a branch of its digital assets exchange services in France after fulfilling all requirements necessary to operate as a digital asset financial services firm in the European nation.

Binance’s completed registration in France makes the exchange the premier digital asset exchange in France. Also, Changpeng Zhao, Binance’s CEO, recently announced in Germany that his organization was in talks with German authorities to secure licensing to operate in their nation.

Moreover, Zhao disclosed that his organization is hiring compliance staff to operate in the upcoming German subsidiary of its global enterprise. Zhao announced while giving a speech at a conference in Germany on digital marketing.

Late last year, Zhao announced that his organization would operate only within the legal framework of the nations where it locates its branches as it expands. He also added that his organization would set up regional headquarters over sub-divisions of the global enterprise as it expands globally.

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