THE NETHERLANDS

You can rejoice. Owning cryptocurrencies is legal in The Netherlands [2]. Currently, there is no law prohibiting individuals from owning any crypto assets. All forms of cryptocurrencies, bitcoin, altcoins, stablecoins and utility tokens are legal to own. The same is true of Non-Fungible Tokens (NFTs).

The Dutch Central Bank (Dutch: De Nederlandsche Bank – DNB) hasn’t definitively answered this question. However, the DNB has expressed that cryptocurrencies are not considered money [3]. The DNB only considers fiat currencies, such as the Euro or the US Dollar to be money. In most official letters and reports, cryptocurrencies are referred to as a “store of value”, “digital means of exchange” or just simply as “cryptos”.

That doesn’t mean that The Netherlands just ignores the fact that you own cryptocurrencies. Cryptocurrencies and other crypto-assets are still considered property. This means that the Dutch Revenue Service (Dutch: Belastingdienst) wants to know if you own cryptocurrencies and other crypto-assets to see if you need to pay taxes [4].

Read more about taxes below.

What goes for cryptocurrencies also goes for other crypto-assets. It’s legal to own them in The Netherlands. There is no law telling you that you cannot. [5] 

Again, an NFT is considered property according to the Dutch Revenue Service (Dutch: Belastingdienst) and you might have to pay taxes when you own NFTs. [6]

You can read more about taxes below.

Yes, it is. You can legally buy cryptocurrencies in The Netherlands. There are plenty of exchanges that legally offer so-called on and off-ramp services (exchanging fiat currencies for cryptocurrencies and back) to Dutch citizens. That said, there’s one important rule you should be aware of before you start buying crypto. It’s the registration obligation. [7]

The Netherlands does not have a licensing system Crypto-Asset Service Providers (CASPs). However, The Netherlands does have a registration obligation for certain CASPs, which includes most exchanges. Each CASP that lets Dutch citizens exchange fiat money for cryptocurrencies (and back) has to register with the Dutch Central Bank (Dutch: De Nederlandsche Bank – DNB). A full background check of the CASP is part of the registration. [8] In other words, the DNB has checked the CASP and its owners. 

To be thorough, you as an individual are not committing any crimes if you buy cryptocurrencies from an unregistered CASP. [9] However, we do recommend that you stick to the registered ones. It’s safer because the DNB performed a background check. If you still choose to buy cryptocurrencies from an unregistered exchange, make sure to DYOR (Do Your Own Research) to check if the exchange doesn’t run off with your money. 

CONSUMER PROTECTION

It’s important to understand that, in contrast to a regular bank or stock broker, the DNB does not enforce consumer protection laws against cryptocurrency exchanges and other CASPs. [10] It doesn’t matter if the CASP is registered with the DNB or not. In other words, when an exchange would, for example, block your account for no reason, you can’t count on the DNB to assist you with this matter. This doesn’t mean that consumer protection laws don’t apply, but it does mean that you would have to sort things out with the exchange yourself. 

The registration with the DNB only includes monitoring if the exchange is operating legitimately (complying with the law). This mainly involves making sure that the exchange is compliant with Dutch laws against money laundering.

Yes, you can. Most registered and unregistered exchanges (read more about registrations in the question above) allow you to buy cryptocurrencies with your credit or debit card. Some cryptocurrency exchanges even allow you to use iDeal as a payment option. However, most exchanges don’t offer iDeal since it’s only used in The Netherlands.

An Initial Coin Offering (ICO) is the moment a cryptocurrency is first offered to the public. The simple answer is that it is legal for you to buy cryptocurrencies from an ICO. However, the not-so-simple answer is that the ICO itself might not be legal. 

First things first. Yes, you can legally buy cryptocurrencies from an ICO. The Netherlands does not have any regulatory restrictions that prohibit an individual from buying crypto from an ICO. Unless, of course, it’s the ICO of the official coin of Al Qaida or any other criminal or terrorist origination for that matter. This is because you would be knowingly and willingly financing a terrorist or criminal organisation. [11]

But now the complex stuff. The cryptocurrency being offered during the ICO might qualify as a security or a stake in an Alternative Investment Fund (AIF). [12] If it does, the ICO is illegal if it’s not properly registered and supervised by the Dutch Central Bank (Dutch: De Nederlandsche Bank – DNB) and the Dutch Financial Market Authority (Dutch: Autoriteit Financiële Markten – AFM). [13]

The question of whether the cryptocurrency being offered qualifies as a security or a stake in an AIF is only assessed on a case-by-case basis, mostly after the ICO has already occurred. In practice, this means that, unless the company behind the ICO has asked the DNB or AFM for advice, you don’t know if the ICO is legal or not. That said, you can be 99% certain that if you are buying into an ICO from a start-up halfway across the globe, the chances are slim to none that they consulted the DNB or AMF. 

Furthermore, an ICO can also be structured in such a way that it falls completely outside of the scope of the DNB or AMF. So, even if the AMF wants to protect, they simply don’t have the right legal tools for it. [14]

Why is this important? Firstly, you don’t know if the ICO you’re taking part in is legal or not. This means that the company behind the ICO might be illegally offering securities and can get a huge fine, in the Netherlands or abroad. [15] Secondly, unless the ICO is fully registered in the Netherlands or abroad (which they aren’t 99.99% of the time), there is no oversight of any kind and you might be buying into a scam. An academic paper written in 2017 indicated that the majority of the ICOs are mostly offered by off-shore companies with anonymous founders and often don’t have a white paper or a white paper that contains incomplete information. [16]

To conclude, unless you’re an experienced crypto-trader and you can afford to gamble a bit, we strongly advise that you don’t buy into ICOs. 

There is currently no law in The Netherlands that prohibits the sale of NFTs. You can go to any of the larger NFT marketplaces and shop around. [17] You can also buy NFTs from any other individual (peer-to-peer trading). However, always be careful if you don’t know the person who is selling. You might end up buying stolen goods (which is a crime in The Netherlands). [18]

What you want to keep in mind is that there is no registration obligation for NFT marketplaces or creators for NFTs for that matter. In other words, the Dutch Central Bank (Dutch: De Nederlandsche Bank – DNB) or any other government agency has not checked if the company or person behind the NFT or marketplace is legitimate. [19] So, always DYOR (Do Your Own Research) before you buy a new NFT to make sure it’s safe. 

Peer-to-peer trading, in other words, buying from another individual is legal in the Netherlands. There is no law prohibiting it. [20] The only line you should not cross is knowingly and willingly buying cryptocurrencies or other crypto assets that were stolen or otherwise illegally obtained. [21]

Knowingly and willingly knows certain degrees. For example, buying goods and services, including cryptocurrencies, on the dark web against discount prices is a good example of “knowingly and willingly” buying stolen goods. You can play dumb all you like when the police show up, but they will simply state that you could have easily suspected that these bitcoin were stolen. It’s too obvious. [22]

You may also want to keep in mind the phrase “too good to be true”. When someone, your neighbour, for example, is offering you bitcoin at a discount without a proper explanation, you can suspect that these bitcoins may have been stolen. You can compare it with buying a cheap bike or one without a lock from someone on the street. [23]

That’s because exchanges and other Crypto Asset Service Providers (CASPs) need to know who they’re in business with. It’s a principle called Know Your Customer (KYC) and it’s part of the EU regulations on anti-money laundering and terrorist financing (5AMLD) that are adopted by The Netherlands. [24] By verifying your identity, it becomes possible to trace all transactions that you make back to you so that the authorities know who you are in case your account is linked to any suspicious transactions. [25]

These laws against money laundering and terrorist financing are also the reason that you now have to submit who you’re sending cryptocurrencies to if you, for example, send crypto from your Coinbase account to another address. This rule is better known as the “travel rule”. The travel rule was introduced into the EU and so Dutch legislation after advice from the Financial Action Task Force (FATF). [26]

In short, you can legally trade cryptocurrencies on all exchanges. There is currently no law in The Netherlands telling you that it’s illegal to trade cryptocurrencies. That said, it’s important that you are aware of the registration obligations for (certain) crypto exchanges. [28]

CENTRALIZED EXCHANGE (CEX)

A CEX, an exchange owned by a registered company, that offers on- and off-ramp services (exchanging fiat money for cryptocurrencies and vice versa) must be registered with the Dutch Central Bank (Dutch: De Nederlandsche Bank – DNB). If it’s not registered, it’s operating illegally. [29] You, however, as an individual, are not committing any crimes when you trade at an unregistered exchange. That said, part of the registration with the DNB is a full background check of the CEX to see if it, including its owners, is legit. Therefore, we always recommend that you trade with a registered CEX. [30] 

DECENTRALIZED EXCHANGE (DEX)

A DEX is an exchange that is not governed by a (centralized) company and only deals in cryptocurrencies. More often than not they are controlled by a Decentralized Autonomous Organisation (DAO). You won’t find any on- and off-ramp services. A DEX can legally offer its services in The Netherlands without having to go through the process of registration with the DNB. [31] However, that also means that no Dutch governmental body has checked if the DEX is operating legitimately (not scamming you out of your money). In other words, make sure to DYOR (Do Your Own Research) before you start trading at a DEX.

CONSUMER PROTECTION

It’s important to understand that there is currently no consumer protection enforced against any cryptocurrency exchanges. It doesn’t matter if the exchange is registered with the DNB or not. The Dutch state still looks at the crypto industry as somewhat of a free for all. In other words, when an exchange would, for example, block your account for no reason, you can’t count on the DNB or another institution to assist you. You would have to sort things out with the exchange yourself. [32]

The registration only includes monitoring if the exchange is operating legitimately (complying with the law). This mainly involves making sure that the exchange is compliant with Dutch laws against money laundering. [33]

Peer-to-peer trading, in other words, buying from another individual is legal in the Netherlands. There is no law prohibiting it. [34] The only line you should not cross is knowingly and willingly buying cryptocurrencies or other crypto assets that were stolen or otherwise illegally obtained. [35]

Knowingly and willingly knows certain degrees. For example, buying goods and services, including cryptocurrencies, on the dark web against discount prices is a good example of “knowingly and willingly” buying stolen goods. You can play dumb all you like when the police show up, but they will simply state that you could have easily suspected that these bitcoin were stolen. It’s too obvious. [36]

You may also want to keep in mind the phrase “too good to be true”. When someone, your neighbour, for example, is offering you bitcoin at a discount without a proper explanation, you can suspect that these bitcoins may have been stolen. You can compare it with buying a cheap bike or one without a lock from someone on the street. [37]

It depends on how you look at it. There is no law in The Netherlands stating that you can only trade a certain amount of cryptocurrencies. [38] However, certain exchanges and other Crypto-Asset Service Providers (CASPs) are legally obligated to verify your identity before you can trade. It’s quite common that an exchange has certain trading limits based on your level of verification. [39]

The verification process is mandatory in the Netherlands. It’s a principle called Know Your Customer (KYC) and it’s part of the EU regulations on anti-money laundering and terrorist financing (5AMLD) that are adopted by The Netherlands. [40] By verifying your identity, it becomes possible to trace all transactions that you make back to you so that the authorities know who you are in case your account is linked to any suspicious transactions. [41]

These laws against money laundering and terrorist financing are also the reason that you now have to submit who you’re sending cryptocurrencies to if you, for example, send crypto from your Coinbase account to another address. This rule is better known as the “travel rule”. The travel rule was introduced into the EU and so Dutch legislation after advice from the Financial Action Task Force (FATF). [42]

The Netherlands has some rules for crypto wallets that you should be aware of. It will help you choose the wallet that is best for you. 

CUSTODIAL WALLETS

The Netherlands knows a registration obligation for all providers of custodial wallets. When a custodial wallet provider does not register with the Dutch Central Bank (Dutch: De Nederlandsche Bank – DNB) it’s operating illegally. However, it’s not illegal to use an unregistered custodial wallet. Then again, it might be less safe since the company offering the wallet has not been vetted by the DNB. [43]

Furthermore, when you use a custodial wallet it means that your cryptocurrencies, or better said, the private keys that give access to your cryptocurrencies are “in the custody” of the wallet provider. You are contractually entitled to your crypto and you can trade and send them, but technically you don’t hold them. This is important because if the custodial wallet provider disappears or goes bankrupt, it will be very difficult to get your crypto holdings back. [44] This is also where the popular crypto-native phrase “Not your keys, not your coins.” comes from. [45]

You should be aware of the fact that the cryptocurrencies in your custodial wallet are not guaranteed like the funds in a regular bank account. There is only a contractual obligation for the custodial wallet provider to keep your crypto safe, but when the wallet provider would go bankrupt, the DNB will not give you your crypto back. [46]

An example of a custodial wallet would the wallet you have with a centralized exchange. Due to the fact that they provide a custodial wallet, this exchange has to register with the DNB. [47] 

NON-CUSTODIAL WALLETS

Using a non-custodial wallet is perfectly legal in the Netherlands. Non-custodial wallet providers do not have to register with the DNB. [48] This is because a non-custodial wallet provider has no custody over the private keys that give you access to your cryptocurrencies. In other words, they have no control over your cryptocurrencies and other crypto assets whatsoever. You’re basically your own bank. [49]

What you should be aware of when using a non-custodial wallet is the fact that “being your own bank” also presents a certain responsibility. For example, if you lose access to your custodial wallet, you can call customer service and sort it out. If you lose access to your non-custodial wallet, there is no one to go to. You can only restore access to your crypto assets by entering the wallet’s seed phrase. You will permanently lose access to your cryptocurrencies if you don’t have it. [50] Then again, in contrast to a custodial wallet, you don’t have to worry about someone else losing your crypto or the company going bankrupt. 

No, there is no legal limit on the amount of cryptocurrencies and other crypto assets that you can hold in your wallet. [51] However, a custodial wallet provider can impose limits on holdings and transactions. [52] If you have a non-custodial wallet, there’s no one who can tell you how much you can or cannot hold. [53]

No. Your cryptocurrency holdings are not guaranteed by any government or central bank for that matter. The Deposit Guarantee Scheme (Dutch: Depositogarantiestelsel) that guarantees the money in your bank account up to €100.000 does not apply to crypto holdings. [54]

The Netherlands does not have a separate banking license for Crypto-Asset Service Providers (CASPs) and cryptocurrencies are not regulated under the current banking system. In other words, no, you won’t find an official crypto bank in The Netherlands. [55]

There are some companies, however, that offer services that mimic banking services for crypto assets. For example, borrowing and lending services or products that allow you to earn interest on your crypto-holdings. You can find more information about this below in the section about earning cryptocurrencies.

Yes, it is. Operating a mining rig in The Netherlands is perfectly legal. However, the profits you make from mining are most likely subject to tax. [56]

For more details about taxes, have a look below.

Staking, the act of committing (lending) your coins to a blockchain protocol to help verify and secure the network in return for rewards, is legal in the Netherlands. There are no laws prohibiting it. [57]

Yes, you can. Borrowing and lending cryptocurrencies in The Netherlands is legal. There is no law telling you that you cannot. [58] Hence you can find plenty of Centralized Finance (CeFi) and Decentralized Finance (DeFi) platforms that offer these kinds of services to Dutch citizens. 

However, there is currently no licensing or registration system for CeFi and DeFi platforms that offer borrowing and lending services. A platform only needs to register when they provide a custodial wallet or on- and off-ramp services (exchanging fiat money for cryptocurrencies and back). This means that there is no Dutch government agency currently making sure these “crypto banks” (this is not an official term) are safe to use. [59] In other words, always DYOR (Do Your Own Research) to make sure the platform is safe to use.

Yes, providing liquidity is legal in The Netherlands. There are no laws that tell you that you cannot do it. However, please be aware that a liquidity pool is not required to register with the Dutch Central Bank (Dutch: De Nederlandsche Bank – DNB). [60] This means that liquidity pools are not supervised by any governmental body in The Netherlands. So, DYOR (Do Your Own Research) to make sure that the pool you’re committing your cryptocurrencies to is legit and safe to use. 

Note: the following only applies to casual traders and owners. Professionals and companies are taxed differently.

Yes, you do. Cryptocurrencies are considered property by the Dutch Revenue Service (Dutch: Belastingdienst) and have to be declared as such in “BOX 3”. The value that you need to declare is the total value of all your crypto assets combined on the reference date (Dutch: Peildatum). The reference date is the 1st of January of the tax. [61]

So, how do you value your cryptocurrencies? That one is rather straightforward. You look at the market value of the cryptocurrencies on the 1st of January. You can find the market value by looking at the prices of your cryptocurrencies as presented by the exchange you’re using. [62]

Things get more complex when you own other crypto assets. If you buy a crypto asset for investment purposes, you must declare the value in “BOX 3” and pay taxes accordingly. However, the Netherlands has a tax exemption for personal art. So, if you can prove that you bought an NFT purely as a work of art to enjoy and admire, you don’t have to declare it. [63] However, it’s highly unlikely that the BD will accept this claim. Concerning other crypto assets, ones that have no artistic value will be considered investments and you are obligated to declare them in BOX 3. [64]

So, again, what is the value that you need to declare? Well, that’s a tricky one. The rule remains that you have to declare the market value of the asset on the 1st of January of the tax year. [65] However, the value of NFTs is highly volatile and even harder to predict, so pinpointing the value on a single date is essentially impossible, unless you happen to sell that day. Hence, if you own a valuable NFT we strongly suggest that you reach out to a qualified tax consultant before you file your tax returns. 

Probably not. If you are a professional trader, yes. If you are a casual trader, no. Keep reading below to see to which category you belong.

PROFESSIONAL TRADERS

A professional trader is someone who …

A) Has specialized/advanced knowledge of the market compared to the general population. For example, you have taken several trading courses and are using advanced software to determine what the market is going to do, giving you an advantage compared to regular traders.

Or …

B) Is trading daily. Are you watching the charts day in and out and making trades left and right? 

You’re most likely a professional trader if one of these points applies to you. If so, your trading profits will be taxed in “BOX 1”. [66]

CASUAL TRADERS

A casual trader is someone who …

A) Does not have specialized/advanced knowledge of the market compared to the general population. Your guess of the price of bitcoin is as good as the next person’s. Your predictions of the market are essentially educated guesses.

And …

B) You’re not trading daily. You’re still active and keep an eye on the market during your morning coffee, but it’s not like a job for you.

You’re most likely a casual trader if both of these points apply to you. If so, your trading profits will not be taxed directly, but your losses are also not tax deductible. That said, the crypto assets you’re holding are still subject to tax in “BOX 3”. [67] Have a look at the question above for more details.

That depends. If you are a professional trader, you can. If you are a casual trader, you cannot. Have a look at the previous question to determine to which category you belong. [68]

That depends. The Dutch Revenue Service (Dutch: Belastingdienst) has stated that setting up a crypto-mining operation requires a substantial investment and is unlikely to be profitable. However, when you do manage to be a profitable miner you have to pay taxes on your mining income. The BD will assess if you’re a profitable miner by looking at your yearly mining income and expenses and will tax any profits in “BOX 1”. [69]

To be thorough, the above also means that if you set up a mining operation and you don’t manage to make any profits, you cannot deduct your investment from any other income you might have in “BOX 1”. For example, your regular job. Take that under consideration before you decide to buy expensive equipment. [70]

Last, don’t forget that the cryptocurrencies you earn from mining, even when you are losing money in the end, are still your property. You have to declare the value of these cryptocurrencies in “BOX 3”. For more details on “BOX 3”, have a look at the first question about taxes. [71]