How to obtain a cryptocurrency license in the Netherlands

Regulation of the cryptocurrency market is constantly becoming stricter. Nowadays jurisdictions impose high regulatory and risk management requirements on virtual asset service providers.

Despite this, we always manage to find a solution that suits the client. All the time our team provides research of the market and regulations on various markets to find the best jurisdiction. Not so long ago we have made the global overview of the VASP regulation in EEA and ready to share information with our future and existing clients. Today we will look at the features of obtaining a cryptocurrency license in the Netherlands.

Tax Summary:

  1. Personal income tax – from 36.93% to 49.5%
  2. Corporate income tax – 19% on the first €200,000 of taxable income, 25.8% on exceeding income 

What law/s governs VASP activities?

  1. Anti-Money Laundering and Anti-Terrorist Financing Act
  2. Implementation Act amending the fourth anti-money laundering directive (link 1; link 2; link 3) (Dutch-only) 
  3. Economic Offences Act
  4. AMLD5

What activities are included in VASP services?

The following crypto service providers are regulated in the Netherlands, according to the Money Laundering and Terrorist Financing Prevention Act:

  1. natural persons or legal entities providing professional or commercial services for the exchange between virtual currency and fiat currency;
  2. natural persons or legal entities that offer professional or commercial custodian wallets.

At the moment the entities who offer crypto-to-crypto exchanges are still not regulated.

Who is the VASP regulator?

  1. De Nederlandsche Bank

What is the procedure for registering a VASP for a local company?

To register, the company must file the following information with DNB:

  1. General company information, including articles of association (in Dutch) and KVK extract.
  2. Foreign companies must include a certified copy of the notarial deed that contains the company’s articles of association. Also provide an extract from the Business Register from the country of incorporation. These documents must be in English.
  3. A company plan, outlining the strategy, an overview of the activities and a SWOT analysis.
  4. Composition of the board, including organizational and control structure.
  5. Delineation of the business operations and management, including rules and regulations, audit, notification procedure, secondment, training, and education.
  6. Description of business operations.
  7. A file per board member, demonstrating their fitness and propriety.

Please follow the link to review the Registration forms.

Is there any specific authorization required for a VASP from another EU member state to provide services in this jurisdiction?

Firms not registered with DNB are not permitted to operate as a crypto service provider pursuant to Section 23c(3) of the Anti-Money Laundering and Anti-Terrorist Financing Act .

With effect from 21 May 2020, DNB is the authority monitoring crypto service providers’ compliance with the requirements imposed by the Wwft and the Sanctions Act (Sanctiewet 1997 – Sw). DNB has supervisory powers and enforcement powers. Pursuant to the Wwft, it can issue an instruction or an order subject to penalty or impose a fine in the event of non-compliance with the registration duty set out in Sections 23b and 23c of the Wwft. Existing crypto service providers that make use of the transitional regime are subject to supervision from the moment the Act implementing the AMLD5 enters into force, regardless of the time of registration.

Failure to register qualifies as an economic offense under the Economic Offences Act (Wet op de economische delicten), which DNB may report to the Public Prosecutor’s office.

What is the liability for the activities of a VASP from another EU member state without local registration/authorization in this jurisdiction?

A fine ranging from €5,000,000 to €10,000,000 is stipulated by Article 31 of the Wwft (Wet ter voorkoming van witwassen en financiering van terrorisme).


Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.


The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation. 

Netherlands – regulatory status of Cryptocurrencies

Gateway to Europe

Increasing number of entrepreneurs are choosing the Netherlands as a place of incorporation and to do business. The reason for this is that despite its small geographical size, the Netherlands has one of the strongest and most developed economies in the world.

The jurisdiction offers many advantages to potential investors and business owners. The Netherlands combines first-class infrastructure with a strategic location in continental Europe, which makes it more attractive to European, Asian and American companies that are looking to expand their presence.

The government actively supports technological innovations, in particular, cryptocurrencies. This approach gives cryptocurrency companies the support they need to expand and encourages innovation in the region. On the other hand, there are some disadvantages, to count some:

  • high corporate rates;
  • a confusing tax system;
  • a peculiar corporate culture.

Contemporary policies

There are currently no regulations in the Netherlands that explicitly prohibit the use and trading of cryptocurrencies. Cryptocurrency is regulated as part of the national implementation of European Union law. The main supervisory authority for cryptocurrency regulation in the Netherlands is the Dutch Central Bank (hereinafter: – “DNB”). The DNB’s goal with regard to cryptocurrencies is focused on overseeing the compliance of virtual assets service providers with anti-money laundering and the financing of criminal or terrorist activities. This means that the DNB focuses on preventing the use of bitcoins and other cryptocurrencies for illegal purposes.

In 2020, the Dutch government implemented new EU rules to regulate cryptocurrencies. The current Dutch anti-money laundering law (hereinafter: – “Wwft”) has been amended to implement the respective EU directive. According to the Wwft, a virtual currency is a digital representation of value that is not issued and guaranteed by a central bank or government, which is not necessarily linked to fiat currency and has no legal status as currency or money, but which is owned by a person or entity accepted as a medium of exchange and can be transmitted, stored and traded electronically. The Dutch government does not want to ban virtual currencies as such, but is keen to regulate them. The current approach to regulating cryptocurrencies is founded on 4 unbreakable principles that officials have outlined for themselves:

  • the integrity of the financial system must be guaranteed at all times. One example of this would be to mitigate the risks associated with money laundering;
  • the technology behind digital currencies must be preserved and improved. The user should not suffer any damage due to technical errors;
  • There is a need to regulate on an international level due cross-border nature of cryptocurrencies;
  • gaps in consumer and investor protection should be addressed. These measures must be proportionate to the risks to consumers and investors.

ICO. The only institutional mention of ICOs was made by the Netherlands Authority for Financial Markets (hereinafter: – “AFM”). Back in 2017, the AFM issued a warning about the serious risks associated with initial coin offerings. These risks mean that there is a high probability that investors will lose their entire investment. In the current circumstances, the AFM is advising consumers to avoid investing in ICOs.

Licensing. There is no licence requirement for virtual asset service providers in the Netherlands, however, firms offering exchange services between virtual and conventional currencies and providers of custodial wallets for virtual currencies must obtain a registration/permit to operate from the DNB. Once the DNB has received all necessary information about the company, the assessment team will review the contents of your registration request to determine whether the company, as a virtual asset service provider, meets the legal requirements. Once the corporate information has been assessed, the company will be notified of the decision confirming whether or not they are eligible for registration. The registration process, from setting up a company to obtaining authorisation, can take up to 4-5 months in total.

AML requirements

Cryptocurrency service providers are subject to the requirements of the Wwft regulations. The law specifies which specific entities are subject to the regulatory oversight, including companies professionally engaged in or offer services in:

  • virtual currency and fiat currency exchange services; and/or
  • secure cryptographic private keys, custodial wallets, on behalf of their customers to store, deposit and transmit virtual currencies (custodial wallets).

Wwft sets a number of requirements for companies such as: conducting customer due diligence (KYC), verification and reporting of suspicious transactions (for occasional transactions over €15,000), the need to appoint a Compliance Officer in an institution with 2 or more employees, etc.

Taxation

In most cases, the tax authorities treat cryptocurrency as invested capital, which means that it is treated as savings and other investments. If income from the cryptocurrency is received as a regular trading activity or from mining, making it a person’s main source of income, or if the salary is paid in cryptocurrency, then this income shall be taxable under professional activity.

Personal income tax. Income from assets in the Netherlands is subject to wealth tax. For 2021, the non-taxable amount is set at €50,000, meaning that the total value of the total capital invested is less than this threshold, then this income is not taxable. If you have a partner/husband/wife, the non-taxable portion is set at €100,000. The flat rate of wealth tax is 31%.

Corporate income tax

In general, a Dutch resident company is subject to CIT on its worldwide income. The corporate income tax rate depends on the taxable amount. The taxable amount is the taxable profit in a year reduced by deductible losses.

  1. If the taxable amount is € 395,000 or less, the corporate income tax rate is 15%.
  2. If the taxable amount is more than € 395,000, the corporate income tax rate is € 59,250 plus 25,8% for the taxable amount exceeding € 395,000.

A reduced rate of 9% applies to activities covered by the innovation box. The innovation box provides tax relief to encourage innovative research. All profits earned from innovative activities are taxed at this special rate.

Should we expect more regulation in the future?

The regulator does not intend to change the national system for regulating virtual assets. The European Parliament is reported to be drafting a legislation (Markets in Crypto-assets) that will establish a single advanced regulation of digital assets across the European Union. Officials say the directive will not come into force until 2024 at the earliest.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.


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Regulatory scope of crypto businesses in Netherlands

Using cryptocurrencies is de facto legal in the Netherlands, as there is no law that explicitly prohibits usage or trade of digital assets.

Sharply increasing value and plenty of free time during the lockdown of Covid crisis made cryptocurrencies extremely popular across the nation. The government does not treat them as e-money, but as a means of exchange, and is striving to regulate them.

Legislative framework

There is no law that regulates ICOs and token issuance. Virtual assets do not fall under the regulatory scope of monetary policy as they do not fulfill the role of money in the Netherlands. Anti-Money Laundering and Combating Terrorist Financing Act (hereinafter:- “AML Act” defines a virtual currency as ‘a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically’.

As of May 21, 2020, companies providing cryptocurrency exchange service and/or custodial wallet providers have become subjects to regulatory oversight of the National Bank of Netherlands (De Nederlandsche Bank- hereinafter: – “DNB”) in respect of supervision of countering money laundering and combating terrorist financing. According to their website, they aim to prevent bitcoins and other cryptos from being used for illegal purposes such as money laundering or funding of criminal or terrorist activities. This supervision over virtual asset service providers (hereinafter:- “VASPs”) is a result of the government’s new approach to prevent money laundering and combating terrorist financing, (hereinafter:- “AML/CFT”) as well as implementation of the fifth European Directive on Anti-money laundering and counter-terrorist financing into domestic legislation.

Companies that offer services in or from the Netherlands for the exchange of cryptocurrencies and fiat currencies and/or custodial wallet providers are required to register with DNB. Foreign companies engaged in crypto service brokerages who want to conduct business in the Netherlands are also subject to registration.

Registration procedure

To apply for registration, applicant must file the following information with DNB:

  • general company information, including articles of association (in Dutch) and extract from KVK (commercial register);
  • company plan, outlining the strategy, and overview of the activities and a SWOT analysis;
  • сomposition of the board, including organisational and control structure;
  • delineation of the business operations and management, including rules and regulations, audit, notification procedure, secondment, training, and education

description of business operations;

  • file per board member, demonstrating their fitness and propriety.

When the company applies for registration, DNB will also conduct integrity supervision of your company board, which requires submission of a separate application. there is basically two steps for this:

  1. applying for registration via the Digital Supervision Portal (DLT) by completing application form and uploading corporate information files. eHerkenning (digital identity authentication service for businesses) is also needed to apply through the DLT;
  2. requesting a fit and propriety assessment through DLT by separately filing the information about board members, using the Initial assessment form for crypto service providers.

The registration process takes approximately two months from the date of filing, on condition that the applicant correctly submitted the application. DNB evaluates if the applicants meet regulatory requirements. One time registration fee in the amount of EUR 5,000 applies for processing applications. The companies should once again apply to DNB to conduct fit and proper assessments should it admit new board members or change board members after the registration: fees for fitness assessment – EUR €1,100 and propriety assessment: EUR 2,000. DNB registered entities are also charged regular supervision fee in accordance with Financial Supervision Funding Act (Wet bekostiging financieel toezicht) the amount of which will be calculated and determined by DNB each year.

To obtain a registration, VASPs must be able to demonstrate that they comply with the Anti money laundering and counterfeiting Terrorist Financing Prevention Act and the Sanctions Act 1977. These acts demand from VASPs to take necessary initiatives to assure that they properly check identities of individuals or legal entities that they are doing business with and keep records in conformity with the acts. So called integrity check, DNB supervises only these two laws for registered providers of crypto services. Registered companies are not subject to the prudential supervision by DNB, thus financial business risks are not monitored.

For the time being, there is no registration requirement for entities that only exchange between virtual currencies, but the DNB predicts that this may change in the future.

Crypto service providers are not supervised by the The Netherlands Authority for the Financial Markets (hereinafter:- “AFM”). According to AFM, cryptocurrencies are not financial products, so that (being involved as an intermediary in) the purchase or sale of cryptos, or the provision of services related to the custody or management of assets in cryptos is not regulated under the Financial Supervision Act. This means that there is no specific consumer protection using crypto services, except for general consumer protection laws.

Final remarks

It’s worth to note that contemporary supervision by DNB does not offer real protection to key stakeholders of the cryptomarket, despite the growing interest the investments by the consumers are vulnerable to losses. The universal EU regulation is still expected to be introduced, which is believed to establish a more protective regime to investors and consumers. The government is well aware of the prospects of digital assets in the Financial market and must therefore embrace the digital transformation, while also ensuring the mitigation of potential risks. We will keep a close eye on the legal developments of whatever happens in the crypto arena.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.


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