Cryptocurrency (virtual or digital currency) is quickly becoming popular in the Netherlands. It is estimated that almost 3.04% of the country’s’ population currently holds monetary assets in crypto. Moreover, the Netherlands has very lenient crypto tax rules compared to other countries, making it a great long-term investment.
That being said, you should learn about the important legalities surrounding this type of currency. If you’re interested in investing in Dutch cryptocurrency, you must follow the Netherlands’ regulations and European Union’s crypto trading policies to ensure effective trade.
So, read on to learn all the essential trading and tax regulations, and become well-versed with Dutch coin and Dutch crypto exchanges.
History of Dutch Cryptocurrency
At the beginning of 2018, the central bank of the Netherlands, De Nederlandsche Bank (DNB), published a report that stated that cryptocurrency is not equivalent to real money. As a result, it is not regulated by monetary policy.
Moreover, as crypto falls under virtual currency, people could barter and trade it without any legal permission. During this period, even the European Union (EU) had no crypto asset regulation policy, which could lead to increased liquidity and operational risks.
Therefore, the Dutch Minister of Finance presented a letter to the Dutch Parliament stating that cryptocurrency is beneficial on an international level and should be properly regulated instead of setting a crypto ban in Nederland. As a result, in May 2020, the Dutch Implementation Act was passed for crypto exchange and trading regulations.
After the Act’s approval, wallet providers and crypto exchanges had to follow the fifth European Directive on anti-money laundering. In addition, they had to register with DNB (central bank) and comply with its business conduct rules to monitor each transaction. Unregistered crypto service providers were imprisoned and had to pay high fines.
Cryptocurrency Regulations in the Netherlands
You can easily use and trade cryptocurrency in the Netherlands, as there is no explicit law prohibiting these activities. Currently, all crypto service providers and exchanges must follow the Money Laundering and Terrorist Financing Prevention Act. The Dutch National Bank (DNB) is responsible for making sure all entities follow these regulations.
Any individual or company that provides commercial services to a crypto exchange or custodian wallet company also falls under this jurisdiction. However, services provided by a crypto exchange to another exchange are still not regulated by any act.
So, if you plan to step into Netherland crypto market, you must register with DNB and describe the extent of commercial services you will provide to crypto exchanges. The registration fee is 5,000 EUR. After these proceedings, DNB will assess your credibility by taking these measures:
- Customer reviews on the official websites, from the Netherlands region
- Proof of advertisement payments made to social media and other marketing agencies
- Checking equivalent registration of services in other EU and EEA member countries
Benefits of Crypto for the Netherland’s Economy
- Liquidity: Crypto assets offer liquidity due to minimized trading fictions and ever-present execution opportunities. They also offer liquidity for previously illiquid assets by certifying a secure token that digitally represents a tradable asset.
- Programmability: Crypto assets are programmable, allowing businesses to leverage opportunities to be more flexible with ownership, voting rights, dividends, and financing. It also ensures automatic enforcement of governance and shareholder regulations through the token’s smart contracts.
- Inclusivity: Crypto assets empower small investors to become shareholders. Individuals can invest as little as 2 Euros from their disposable income. This creates opportunities for investment for all classes of citizens.
- Security: With crypto assets, businesses can easily make financial transactions quicker, more affordable, and secure. Tokenization instills trust among shareholders due to transparent and protected transactions. Compliance is automatically enforced, as regulations are embedded in the code.
- Real-time Monitoring: The decentralized and transparent nature of crypto assets allows for real-time monitoring and performance of on-demand surveys and audits. As a result, resistance in the economy is reduced, along with the cost of transactions and compliance.
- Diversification: Crypto assets play a significant role in optimizing the investors’ diversification strategy. It also facilitates in increasing exposure of Financial Institutions (FIs). As a result, security tokens allow the country to raise capital by increasing the investors’ reach. Moreover, businesses can leverage crypto assets to quickly build an ecosystem with tokens.
European Union Crypto Regulation
In October 2022, the European Union Council presented comprehensive regulation rules for cryptocurrency markets. These rules are termed Markets in Crypto-Assets Regulation (MiCA). The role of MiCA is to regulate all crypto-asset-related activities in the Netherlands and other countries associated with European Union. It focuses on authorization, transparency, supervision, and disclosure of the crypto transaction.
Every persona and organization that deals with cryptocurrency must follow MiCA in crypto asset trading. These EU regulations are placed to regulate the industry, prevent market abuse, and protect consumers when dealing with crypto assets. Moreover, these regulations are effective in stopping money laundering and financial fraud.
The EU crypto regulation laws divide crypto-assets into three categories:
- E-money or electronic tokens
- Asset-referenced tokens
- Other crypto assets (assets that do not fall under the first two categories)
However, non-fungible tokens (NFTs), digital collections, and unique crypto assets are not regulated by MiCA. The crypto regulation laws will be in effect after 12 months of the Act’s approval.
EU crypto regulations have multiple benefits for buyers and sellers of cryptocurrencies, such as reduced risks of crypto assets and better consumer protection. People not covered by these EU regulations are vulnerable to the risks of crypto asset trading. As a result, they can lose a lot of money due to market manipulation, fluctuation, and financial crime (fraud).
This is because cryptocurrency is mostly anonymous, especially if someone is trading through a decentralized exchange. That is why most financial criminals use cryptocurrency to launder their money or financially support terrorist activities. But with the help of recently presented regulations, it will be harder for people to conduct illegal transactions and avoid tax.
In addition to cyber risks, crypto also consumes electricity in huge quantities, harming the environment with a larger carbon footprint. The new EU regulations will work on making crypto mining more sustainable.
Netherlands Crypto Tax Rules
Cryptocurrency is exempt from capital gains taxes in the Netherlands because virtual currency is considered an asset. This means you will be taxed on the presumed value of crypto assets but not on the profits.
When you receive the tax report, it will not have cryptocurrency listed in it. Instead, you are responsible for declaring your cryptos as an asset in the taxation section.
It is very important to declare your crypto assets in the tax return report. As the value of cryptocurrency is volatile and can be different every day, you will write the value your crypto coin has on the first day of the respective year.
Due to new EU guidelines, crypto assets are expected to be taxed in the future. If you don’t declare your crypto assets in the tax report, they will become pre-completed declarations. Moreover, Dutch authorities consider undeclared crypto assets as “undisguised capital.” In this case, you will be charged with a fine that can amount to up to three times the tax you owe.
Coinbase Arrival in the Netherlands
Coinbase (COIN) is one of the largest cryptocurrency exchanges. It has recently got approval from the central bank of the Netherlands to provide its services to the Dutch population and other European Union-related countries.
Now, all crypto investors registered with the De Nederlandsche Bank can access coins, tokens, and services related to Coinbase. However, you will be able to benefit from Coinbase crypto trading services after MiCA regulation is applicable in all EU nations.
What Is Dutch Coin?
Dutch coin also referred to as DUTCH Coin, is a digital currency for Dutch people. The current Dutch coin price is 0.0000714 USD. If you want to invest in a profitable virtual coin, buying Dutch coin crypto stock is not a good idea. According to Wallet Investor Forecast System, DUTCH is a non-profitable investment for the long term (at least up to 1 year).
This is because the market value of this crypto coin is easily manipulated by the low market cap. Moreover, based on past rates of DUTCH, the value is expected to decrease in the future.
Where Can You Buy Crypto in the Netherlands?
Dutch people can buy all cryptocurrency coins usually available on the market as there is no particular ban on any specific coin. You can register with these crypto exchanges to invest in crypto in the Netherlands.
- CryptoWallet: It is one of the famous crypto exchanges in the Netherlands. You can buy Bitcoin, Litecoin, Ripple, Ethereum, and other currencies and spend them as real money. This exchange also allows you to pay bills with crypto.
- Bitpanda: This crypto exchange is located in Vienna, Austria but allows Dutch individuals to buy and trade in 20 different crypto coins.
- Coinbase: It is a globally recognized crypto exchange that offers the opportunity to buy and sell 50 major crypto coins. You can use wire and bank transfers to deposit funds into your Coinbase wallet.
- eToro: The exchange allows you to trade cryptocurrencies and stocks. CFD trading (trade and invest through a third-party broker) is also permitted on this platform. However, you must deposit a minimum of $500 to start the trading process.
- Paybis: It is a well-known exchange in the UK that also provides services to the Dutch market. It supports 10 types of crypto coins, such as Bitcoin and Ethereum.
- Coinmama: The platform supports a limited amount (eight) of cryptocurrencies. Moreover, the primary transaction fee is 3.9%, but you can reduce it by using loyalty rewards.
- Kraken: It is another widely used crypto exchange by individual investors and trading firms. Kraken relatively charges a high fee but provides more crypto coins for staking with a higher interest rate.
- Exmo: It is a British native crypto exchange that globally provides services of buying, selling, and trading cryptos for fiat currency.
- Bitstamp: It is a peer-to-peer exchange that only supports five cryptocurrencies. However, the transaction fee is comparatively lower than other exchanges (0.25% per transaction).
- Bitvavo: This exchange supports buying, storing, and trading of more than 150 cryptocurrencies. However, you can only deposit Bitvavo-supported cryptos or euros in the Netherlands.
- Binance: It is one of the biggest crypto exchanges around the world but is not supported and regulated by the central bank of the Netherlands. Therefore, you have to use it at your own risk.
- Cex.io: The platform allows the trading of multiple cryptocurrencies and Fiat money. You can also conduct margin trading.
- Uphold: It is a New York-based exchange also available for the Dutch population. You can trade and transfer cryptos and NFTs (non-fungible tokens).
- Changelly: It is a non-custodial (decentralized) crypto exchange that supports 130+ crypto coins.
The Netherlands allows you to trade and invest in crypto without any strict regulations. In addition, you don’t have to pay capital gain tax on your crypto assets profits. However, you must follow certain rules and regulations of DNB and the European Union. If you do not adhere to these regulations, you will be unable to invest safely in cryptocurrency.
Is cryptocurrency banned in the Netherlands?
Cryptocurrency is not banned in the Netherlands. There are no Dutch cryptocurrency legal requirements that prohibit you from buying, selling, investing, or trading any cryptocurrency coins.
Can I in invest in Binance in the Netherlands?
Binance is another cryptocurrency provider in the Netherlands. You can invest in this coin without legally registering with De Nederlandsche Bank (DNB), which makes it a risky investment coin.
Do you have to pay crypto taxes in Netherlands for holding cryptos?
In the Netherlands, you only have to pay tax when you sell, trade, spend, or transfer cryptos. The tax department assumes a return on investment rate on your crypto assets and charges tax accordingly. So, you don’t have to pay tax on holding cryptos.
Is crypto popular in the Netherlands?
Cryptocurrency is quickly becoming popular in the Netherlands. Currently, almost 5% of the Dutch population has invested only in Bitcoin.
Can I use Coinbase in the Netherlands?
Coinbase has recently signed a contract with the central bank of the Netherlands (DNB) to provide its exchange services. So, you will be able to use Coinbase as your crypto service provider.