The Central Powerhouse of the Netherlands, De Nederlandsche Bank (DNB), has imposed a substantial fine on Crypto.com for bypassing registration requirements for an extended period. The fine, amounting to €2.85 million ($3 million), was issued in October 2022, but the news remained undisclosed until recently. Let us delve deeper into the reasons behind this financial penalty.
The Crux of the Matter
On May 21, 2020, DNB announced that all crypto service providers must register under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act. One might assume that this regulation would be a clear-cut signal for compliance. However, Crypto.com, also known as Foris DAX MT officially, chose to ignore these instructions and continued to operate without registration until at least November 8, 2022.
During this period, Crypto.com attracted a massive customer base in the Netherlands and managed to dodge the responsibilities associated with running a crypto service, such as supervisory fees and compliance costs. However, this evasion came at a cost – they were unable to report any suspicious transactions to the Financial Intelligence Unit-Netherlands, a significant oversight in preventing money laundering and terrorist financing.
The Registration Saga and Rivalry
Despite the financial penalty, Crypto.com managed to secure their registration in the Netherlands by July 2023. This registration came with a touch of irony, as DNB had previously stated that Dutch users could freely use the exchange even though it was operating outside regulatory boundaries.
The situation took an interesting turn when compared to Binance’s experience. The latter was fined a slightly bigger sum of €3.6 million for similar registration evasions, resulting in it leaving the Dutch market after an unsuccessful attempt to register. In contrast, Crypto.com’s response to their financial penalty was a nonchalant shrug and the assurance that it was a “past and rectified incident.”
Last month, Kraken, another crypto exchange heavyweight, acquired its fourth contact license from DNB. This VASP (Virtual Asset Service Provider) registration is a significant component of the MiCA (Markets in Crypto-Assets) regulations, designed to regulate businesses dealing with digital assets within the contact Union. Kraken’s entrance into the Dutch market, armed with the necessary regulatory approvals, could potentially disrupt the competitive crypto services landscape in the Netherlands.
Approximately 20% of Dutch citizens currently own cryptocurrencies, making the Netherlands an attractive market for crypto services. Kraken’s entry into this regulated environment could prove to be a keyboards-changer.
