Blockchain and cryptocurrency companies are raising billions of dollars in capital through Initial Coin Offerings (ICO’s).
In the Netherlands awareness of blockchain technology and ICO’s is growing rapidly.
As a Dutch financial lawyer I find it interesing to be part of the impact of these new technologies and possible changes of the law.
But this explosive growth of ICO’s raises new and complex legal issues and the Dutch legislators are lagging behind.
Regulation of ICO and blockchain in the Netherlands?
The Dutch national supervisory financial authorities have no regulatory power (as yet!).
For now, ICO’s in the Netherlands fall outside the scope of the Dutch Financial Supervision Act (‘Wft’), thus leaving the Dutch supervisory authorities (the Autoriteit Financiële Markten ‘AFM’ and the Dutch central bank – De Nederlandsche Bank – ‘DNB’) with no regulatory power.
However, the Anti-money Laundering and Counter-Terrorist Financing Act (Wwft) is often applicable, and thus in most case companies are required to adhere to AML / KYC (anti money laundering and know your customer regulations).
The Dutch central bank, DNB, is the regulatory power, aiming to prevent the misuse of the financial system for money laundering and terrorist financing purposes. DNB seeks to control integrity risks.
Dutch blockchain lawyer
Blockchain is a secure global digital infrastructure.
Blockchain is a technology that allows secure and transparant transfer of digital goods, not limited to cryptocurrencies (such as Bitcoin, Ethereum and other alt coins).
And also not limited by the Dutch and international borders (and also not by Dutch Law).
Blockchain’s main benefit is the exclusion of middlemen, but also its transparancy. Every transaction is added as a block to the blockchain and contains all details of the transaction. The validity of transactions is cryptographically protected as a block, checked and confirmed by the collective computing power of miners within the network in question.
Smart contracts under the laws of the Netherlands
The role of blockchain in Dutch law will most likely be the most relevant in smart contracts. A smart contract is a set of promises in digital form (including protocols within which the parties perform).
Smart contracts are agreements in computer code that automatically monitor the actions of the parties involved and will automatically provide action / notice when a contractual obligation has been fulfilled (such as automatic termination event). Digital form means that the contract has to be written in machine-readable code. This is necessary because the rights and obligations established in the smart contract are executed by a computer, or a network of computers as soon as the parties have come to an agreement.
In a code money/crypto coins can automatically be returned/or wired in case of fulfilment of certain conditions.
Legal advice on blockchain and ICO’s in the Netherlands
Specific Dutch legislation concerning ICO’s and blockchain technology is non-existent (as for now).
That being said: Dutch privacy laws, anti-money laundering legislation, et cetera, are to be considered when contemplationg an ICO in the Netherlands.
Our Dutch cryptocurrency and blockchain experts have a broad legal expertise, specifically regarding ICO’s (due diligence), corporate and securities laws, regulatory, banking compliance, the Financial Supervisors (AFM and DNB) and the AML / KYC (anti money laundering and know your customer regulations).
If you are seeking legal advice regarding cryptocurrencies in the Netherlands, please feel free to reach out to us