Virtual currencies

Every country has its own currency, such as the euro, dollar or pound, and its own coins, banknotes and exchange rate. However, in recent years there has been growing interest in virtual currencies - also known as cryptocurrencies - such as bitcoin. These currencies have not been around for long and are gaining in popularity. Below we identify a number of risks and explain what we are doing to prevent problems.

Price movements and vulnerabilities

Although virtual currencies can sometimes be used to make payments online, people usually view them as investments. They hope to benefit from substantial price gains so they can sell the currency at a profit. A chance of a large profit often also means a risk of a significant loss. The prices of virtual currencies tend to rise and fall sharply relatively often. A tweet from a celebrity, news about energy consumption, or rumors about legislation can all lead to prices rising or falling by several percentage points.

Pump and dump

There is relatively little trading in many virtual currencies. As a result, they are vulnerable to price manipulation. Fraudsters artificially inflate (pump) the price. They bought the virtual currency long ago at a much lower price with the intention of selling it for a large profit before the price collapses again (dump). Anyone who came on board after them loses money.

The providers of trading platforms (brokers) also sometimes use rising prices to lure in new customers.

Money laundering and cybercrime

It is easy to transfer virtual currency to another country, and this can also be done more or less anonymously. As a result, these currencies are popular with criminals, who use them to launder the proceeds of crimes such as trafficking drugs, weapons and people.

Criminals often also demand virtual currency in ransomware attacks. Moreover, hackers might access your virtual currency and steal your money.

Circumventing sanctions

Transfers to and from some countries are prohibited because sanctions have been imposed by the government. Virtual currencies are sometimes used to circumvent those sanctions.

What is Rabobank doing?

We welcome innovation and are therefore closely monitoring developments in the field of virtual currencies. As a gatekeeper of the financial system, we want to help you avoid becoming involved in money laundering and other criminal activities.

We invest a great deal of time and money in detecting criminal behavior and investigating transactions. We also comply with the Dutch Prevention of Money-Laundering and Terrorist Financing Act (Wwft). This means that we must carefully check where the money in your account comes from and report suspicious transactions. If you invest in virtual currencies, or use them for transactions, we may ask questions about this.