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DeFi and Credit Risk
A senior Dutch financial regulator has stated that crypto derivatives trading should be limited to wholesale markets.
The statements suggest that Dutch regulators seek to follow the United Kingdom's lead and prohibit average retail consumers from trading virtual asset options and futures, even if they lack the authority to do so.
"I believe that crypto derivatives trading should be limited to wholesale," stated Paul-Willem van Gerwen, Head of Capital Markets and Transparency Supervision at the Dutch Authority for Financial Markets (AFM). He noted the dangers of opaque markets, which are prone to manipulation and other illicit conduct.
Van Gerwen's remarks were made in a lecture last week and were published on the AFM website on Tuesday.
Van Gerwen mentioned limits implemented by the Financial Conduct Authority in the United Kingdom in 2020 that virtually limit trading to professional financiers, adding that "we haven't done so, yet" in the Netherlands.
Since U.K. venues were blocked from European Union markets following Brexit, Amsterdam has become a centre for many types of financial trading.
Retail trading in more traditional financial instruments, such as turbo leveraged products, has already been restricted by the AFM. An AFM representative informed CoinDesk that the AFM does not have such powers over crypto exchanges, but that this may change if an EU statute known as the Markets in Crypto Assets Regulation (MiCA) takes effect.
Van Gerwen stated that he would like to see more experiments using distributed ledger technology (DLT) to enable trading, as this might reduce costs. However, he cautioned that centralized authorities would be required in the event that a transaction went wrong.
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