Flow Traders NV, based in Amsterdam, has entered the cryptocurrencies market despite warnings from the Dutch Authority for the Financial Markets (AFM).
Europe’s largest trader of listed funds, Flow Traders NV, is reportedly the first company to buy and sell quoted tickets based on Bitcoin (BTC) and Ethereum (ETH). According to Bloomberg, these publicly traded notes could increase the attractiveness of cryptocurrencies by making it easier and cheaper to invest in such assets.
Flow Traders NV Co-Executive Director Dennis Dijkstra said that cryptos are underestimated, and added that cryptocurrencies market “is big, and it’s going to be regulated very soon. Market participants are much more professional than people think. Institutional investors are interested. We know they are because they ask us to.”
The AFM did not share the enthusiasm of Flow Traders NV, but while the FMA can make recommendations and public warnings, it can do little to prohibit a company from trading in regulated securities on a regulated market.
We discourage activities in cryptocurrency by both consumers and professional licensees. Because of its novelty and the anonymity it potentially offers, it is very prone to abuse. Given its inability to serve the promised purpose as currency, we do not consider it an asset class.
Nienke Torensma, a spokesman at the Authority for the Financial Markets (AFM).
The Dutch Authority for the Financial Markets is concerned about cryptocurrency investments, while the Dutch government militated for a balanced regulatory framework for cryptos in May
According to Dijkstra from the Flow Traders NV, the company was hedging its cryptos transactions with futures contracts managed by CME Group Inc. and Cboe Global Markets Inc. He stated that the new approach has “great indirect benefits” for the development of Flow Traders NV’s foreign exchange trading business.
According to Bloomberg, in the first quarter of 2018 Flow Traders NV traded the equivalent of $284 billion in Euros of ETFs worldwide, including the equivalent of $167 billion in Europe, making the company the largest trader on the “Old Continent.”
The Authority for the Financial Markets raised concerns about investments in cryptocurrency in mid-June by sending a letter to market participants seeking to offer investment opportunities in cryptocurrency. The regulator said the related risks meant that these companies might not live up to their licensing obligations.
On the other hand, one month before that, in May, the Dutch government released a report stating that cryptocurrency poses a low risk to the country’s financial stability. The report predicts that the risks associated with crypto will increase with greater involvement of government financial institutions and stresses the need for balanced financial regulation.
