Cryptocurrency Poses Low Financial Risk, Dutch Government Study Finds

Cryptocurrencies pose a low economic risk to the financial foundation of the Netherlands. This is the gist of a recent report released by the Dutch government. The review was prepared and published by the Netherlands' Bureau for Economic Policy Analysis.

The agency said that at the moment, digital currencies don’t present alarming threats to the country’s financial system as the market only involves a relatively low level of capitalization. Moreover, traditional financial institutions are not heavily involved in the crypto space just yet, which the Dutch government considers as positive.

However, it is important to note that the report separately addressed the problems that come along with cryptocurrencies. Issues such as crime financing, fraud, high volatility, hacking activities and high energy demand have been segregated from the review.

Interestingly enough, the government's analysis outlined that the crypto-related issues will arise parallel to how much they interact with the financial sector. Additionally, it doesn’t consider cryptocurrencies as an outright alternative to traditional money, arguing that crypto users usually hold on to their digital coins rather than use them as a means of payment for their everyday needs.

Regulatory groundwork is also one of the topics that the report included. The paper emphasized that the lack of a legal foundation is equally dangerous to placing regulations that will control cryptocurrency growth. Furthermore, the report argues that harsh legislations will likely increase the operation of “shadow banks.”

The review holds a bit of similarity to the recently released publication by the Boston College Carroll School of Management. In the College’s 54-page report, it showed that the average initial offerings of investors are yielding a glowing 82 percent capital return.

Researchers said that if an ICO fails to register its coins with an exchange token within a 60-day period, an investment drop will follow. But the opposite is what their data yielded, with investors seeing “nearly double” their capital’s earnings despite late registration.