The director of the Dutch Bureau for Economic Analysis is calling for a complete ban on the mining, holding, and trading of Bitcoin and other cryptocurrencies.

This comes after crypto trading platform Bitonic won its case against the Dutch Central Bank last month regarding the apex bank’s wallet verification requirement. The regulator formally acknowledged at the time that its requirement was unlawful and should have never been called for the purpose of crypto exchange platform registration.

Now, today in an opinion piece on the local publication FD which had 3.72 million visitors in May, Pieter Hasekamp, director of the Central Planning Bureau, said the bursting of the crypto bubble is inevitable, and the Netherlands needs to act now, or the consequences of the crash will be “too great.”

Pointing to Gresham's law, “Bad money crowds out good money,” Hasekamp said Bitcoin fits this pattern with cryptos exhibiting “all the hallmarks of “bad money”’ — unclear origin, uncertain valuation, and shady trading practices.

According to Hasekamp, cryptocurrencies do not fulfill the three functions of money, while government money “scores well in terms of value retention.”

Interestingly, the buying power of one euro (1€) has depreciated by a whopping 30% between 2000 and 2020 from 1€ to 0.7€. Hasekamp wrote,

“In recent decades, there has been hardly any currency devaluation. Although inflation is now slowly picking up, few people believe that we are returning to the figures from the 1960s and 1970s.”

All in all, the current monetary system works very well in practice, he said while arguing further improvements are conceivable through central bank digital currencies (CBDC).

While fiat currencies work so well, private cyber currencies “perform far worse than public money on all counts,” he added.

But Hasekamp did find one area where cryptocurrencies do better, and that’s in the privacy aspect, and “that anonymity is exactly what makes them attractive to criminals.”

As for its use as a store of value, Haskamp wrote that it is based on the hope that cryptocurrencies will one day replace real money, “but that's not going to happen.” He wrote,

“Cryptocurrencies are essentially neither money nor a financial product, but… a contagious story in which people believe because other people believe in it. Gresham's law is replaced by Newton's law: what goes up must come down. The ultimate collapse of the crypto bubble is inevitable.”

As countries take steps to curb the crypto hype, Hasekamp wants the Netherlands to move fast and “ban Bitcoin” because “whoever moves last is the loser.”

He points out how China has already made its move by banning several crypto activities while the Netherlands is lagging behind. While the Central Planning Bureau concluded in 2018 that stricter regulation was not yet necessary, cautious regulation can now “backfire,” he said.

Regulation simply “legitimizes crypto as a bona fide financial product. Recent developments show that it is time to act: the longer we wait, the greater the negative consequences of the eventual crash,” said Hasekamp.

As such, he is recommending a total ban on the production, trading, and even possession of cryptocurrencies.

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