The Dutch Central Bank, De Nederlandsche Bank (DNB), has announced that it has imposed an administrative penalty on the centralized cryptocurrency exchange Crypto.com for operating without proper registration in the Netherlands for over two years. The fine was handed down following allegations that Foris DAX MT Limited (DAX MT), the operator of Crypto.com, provided crypto services in contravention of Dutch law.
Infringement of the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft)
According to the DNB, Crypto.com breached the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) by offering professional or business services for the exchange of virtual currencies without registration between May 21, 2020, and at least November 8, 2022. This violation constituted a Category 3 offense under the Wwft, which carries a base fine of €2 million ($2.17 million). However, given the gravity and expanse of the infringement, the fine was increased to €2.85 million ($3.1 million).
Significant Presence and Competitive Advantage
The DNB’s decision was influenced by Crypto.com’s considerable presence in the Netherlands, which enabled it to acquire a competitive edge over registered competitors by evading regulatory fees and compliance costs. This is not the first time the DNB has taken enforcement action against unregistered crypto exchanges. Previously, both Coinbase and Binance faced fines surpassing €3 million for similar violations.
Registration and Compliance
Despite receiving an administrative penalty, Crypto.com managed to secure DNB registration in July 2023 and is now authorized to operate legally in the Netherlands. This development underscores the DNB’s role as the regulator of crypto service providers, ensuring adherence to national laws and fostering a compliant market.
Precedents: Coinbase and Binance
It is worth mentioning that this isn’t the first time unregistered crypto exchanges have faced the consequences of non-compliance. In the past, Coinbase and Binance were both penalized for providing professional or business services to exchange virtual currencies without registration, with fines exceeding €3 million. While Coinbase eventually obtained regulatory approval in September 2022, Binance ceased its operations in the Netherlands following its failure to secure registration.
Conclusion
The Dutch Central Bank’s enforcement actions against unregistered crypto exchanges serve as a reminder that regulatory compliance is crucial for operating in the Dutch market. Crypto service providers must adhere to local laws and regulations, ensuring transparency and security for all market participants. With recent developments like Crypto.com’s registration and the increasing scrutiny on crypto markets worldwide, it is clear that regulatory frameworks will continue to play a significant role in shaping the future of digital assets.
