A Dutch bitcoin (BTCExchange has filed a preliminary injunction with a court in Rotterdam to suspend the additional requirements for wallet verification of the central bank. Bitonic is trying to challenge the new rules that De Nederlandsche Bank (DNB) issued on September 21, 2020.
Dutch Exchange states that additional KYC rules do not have a ‘correct legal basis’
According to the bitcoin exchange Announcement, the additional Know Your Customer (KYC) requirements imposed by the central bank violate user privacy. However, the crypto company clarifies that the legal obligations in this case “are not in dispute”.
A section of the first set of rules published by De Nederlandsche Bank in 2019 reads:
Crypto service providers must check whether their customers and any ultimate beneficial owners (UBOs) are on a Dutch or European sanctions list and report any hits to DNB. Risk-based controls are not allowed … Compliance also means that institutions must control incoming and outgoing payment transfers.
But when Bitonic was granted registration as “provider of crypto services” by DNB, they had to comply with the new measures with which they initially disagreed. At the time, the bitcoin exchange said:
From now on, we are required to request additional information such as the purpose with which you want to buy bitcoins and what kind of wallet you use. Additionally, we are required to verify that you are the legitimate owner of the provided bitcoin address by asking you to upload a screenshot from your wallet or by signing a message.
Based on independent expert advice, the company claims that the additional KYC requirement “had no proper legal basis”. Bökkerink Compliance International provided the advice.
The Netherlands-based bitcoin exchange commented on the matter:
We have not received a convincing answer to the fundamental questions [from the DNB] we raised this issue during the registration process. In addition, we are also waiting for a response to a letter to DNB, which was sent at the beginning of November 2020 by 25 of the 38 notifying parties. In the meantime, we have been forced to work in a way that violates privacy rules for a while. To prevent this, we asked DNB again at the beginning of this year to withdraw the obligation. This request was rejected with reference to the Sanctions Act. However, we do not agree with that explanation.
KYC rules are still a controversial hot topic among the Dutch Crypto community
The history of the Netherlands in search of regulation of the crypto industry dates back to 2018. The government argued that they wanted to prevent money laundering and alleged terrorist financing that cryptocurrencies might prefer.
However, De Nederlandsche Bank’s KYC measures sparked controversy among the local crypto community. In fact, are Dutch users complain on social media about crypto exchange Bitstamp’s inaction to challenge DNB’s rules.
What do you think of the reasons behind this preliminary injunction? Let us know in the comments below.
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