11:23 AM
Connect Directly

Dutch Banks Told to Steer Clear of Bitcoin

The Dutch Central Bank, citing regulatory concerns, cautioned the country’s banks about doing business with Bitcoin-related organizations.

Bitcoin may have suffered a regulatory setback yesterday when the Dutch Central Bank warned Dutch banks about the possible risks of engaging with Bitcoin-related businesses.

Bitcoin has grained significant popularity in the Netherlands compared to many other countries. This Reddit post from last December illustrates the ease of using Bitcoin at online retailers in the country, and at some brick-and-mortar ones as well. The Netherlands also has one of the highest Google search volumes of the the term “Bitcoin” of any country in the world.

But the Dutch Central Bank said in its statement that banks should be hesitant about doing business with Bitcoin-related businesses because of its anonymity, which could be used to skirt anti-money laundering laws. That makes virtual currencies like Bitcoin “an attratcive target for criminal activities,” the central bank said in its statement.

[For More on Bitcoin, Check Out: Why Bitcoin Won’t Die]

The Dutch Central Bank also expressed concerns over liability and the volatility of Bitcoin’s exchange rate. It also said that it will examine whether banks and payments providers in the country are involved in Bitcoin activities and whether they have controls in place to deal with the risks it cited. The U.K. government has also intends to investigate the application of anti-money laundering laws to virtual currencies.

Some countries, like China, have already banned Bitcoin. In the U.S., the Federal Reserve has yet to make any rules regarding Bitcoin, although FINCEN has ruled that individuals mining Bitcoins for personal use, and companies trading in Bitcoins as an investment are not subject to the Bank Secrecy Act and its money-laundering rules. If the Netherlands --a country where Bitcoin has already gained some measure of public acceptance -- were to seriously restrict the use of Bitcoin, it could impact how other countries in the EU approach regulation of virtual currencies. And, with China already out of the Bitcoin game, that in turn could harm the viability of Bitcoin as an international payments mechanism.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
User Rank: Author
6/5/2014 | 4:43:56 PM
re: Dutch Banks Told to Steer Clear of Bitcoin
Individuals aren't banned from owning Bitcoins in China, but financial services companies are not allowed to process or handle transactions involving Bitcoin. Basically Bitcoin transactions are cut off from the legal financial system. That's why the Robocoin ATM's in the TechCrunch article you shared aren't connected to any bank account. you can still trade in Bitcoins, but they are rendered pretty useless as a payments instrument if they are cut off from the financial system in such a manner.

And I would imagine that if regulators decide to make banks apply KYC and AML protocols to Bitcoin transactions in the Netherlands, they would expect them to apply the same rules for transactions they are conducting through offshore entities. Otherwise how could the bank prove its due diligence?
User Rank: Apprentice
6/5/2014 | 12:01:54 AM
re: Dutch Banks Told to Steer Clear of Bitcoin
This article is complete bull
In china there is no ban , there are bitcoin ATMs in china
The Dutch central bank issued noting more then a guide how play by the rules , F.E use offshore constructions to avoid problems with flows from unknown source.
Dutch banks love bitcoin and are basicly independent compony's with bank license they can use bitcoin as they want dutch central will and canl not stop banks from using bitcoins.

so there is realy notting new!


DNB warns banks and payment institutions integrity risks in virtual currencies

news item
Date June 3, 2014

In transactions and similar bitcoin virtual currency or altcoins , there is a high degree of anonymity . Banks and payment institutions should therefore be aware of the derived integrity risks they face because they are the identities of the parties involved in virtual currency sales or purchases not know or insufficient . DNB qualifies the current virtual currencies ( bitcoin and other altcoins ) as products with a very high risk profile .
bit coin

At first glance , the underlying systems of transactions in bitcoins and similar virtual currencies very transparent. Transactions are recorded in a public transaction log , so the paths that virtual currency amounts publicly accessible and traceable. However, the transactions are hardly reducible to physical persons . Because virtual currencies may additionally be used as means of payment they are attractive as a link in a money laundering process .

Derived integrity risk and facilitating money laundering
Anonymity within the current virtual currency systems has implications for the management of banks and payment institutions that are considering investing in virtual currencies or have relationships with in altcoins acting entrepreneurs. Because of the anonymity entrepreneurs - whether banks / payment institutions - that have no direct relationship with the parties who sell virtual currency or purchases , or knowledge of their identity . When a bank or payment institution altcoins acting entrepreneurs is relationship , the ( re) purchasers of virtual currencies through which entrepreneurs indirect relationships of that bank or institution . As can also affect indirect relationships reputation of the bank or institution , there is a derived integrity risk . Because altcoins additionally be used as currency , financial institutions could facilitate . By (indirect ) involvement in virtual currency trading inadvertently laundering DNB doubts that banks and payment institutions are able to transactions or clients related to measures in the framework of controlled and sound operations . Appropriate measures to virtual currencies

DNB qualifies the current virtual currencies ( bitcoin and other altcoins ) as products with a very high risk . DNB banks and payment institutions that do decide to get involved in virtual currency companies or invest , therefore themselves into virtual currency in any way involved rigorous tests to ensure compliance with applicable regulations (among others Wwft and Wft ) . In 2014 , DNB will determine whether banks and payment institutions active with new payment methods such as virtual currency and assess these settings control the integrity risks . The controls should include effective measures regarding customer acceptance and monitoring of new innovative companies .

For example BTC-E is using a offshore construction for yuan to btc and vise versa. for more info
why the dutch like bitcoin?
read this and The netherlands is known for offshore services and does not want to stay beheind.

Register for Bank Systems & Technology Newsletters
White Papers
Current Issue
Bank Systems & Technology
BS&T's 2014 Elite 8 executives are leading their banks to success, whether it involves leveraging the cloud, modernizing core systems, or transforming into digital enterprises.
Bank Systems & Technology Radio
Archived Audio Interviews
Join Bank Systems & Technology Associate Editor Bryan Yurcan, and guests Karen Massey and Jerry Silva from IDC Financial Insights, for a conversation about the firm's 11th annual FinTech rankings.