Netherlands imposes hefty fine on Crypto.com for breaching registration requirements
The Netherlands’ central bank, De Nederlandsche Bank (DNB), has recently revealed that it fined Crypto.com a substantial amount for failing to register as a crypto service provider for over two years. The €2.85 million ($3 million) penalty was imposed in October, but the news only came to light recently.
In May 2020, DNB issued a directive requiring all crypto service providers to comply with the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act by registering with the bank. However, Crypto.com, also known as Foris DAX MT, decided to ignore this requirement and continued operating without registration until at least November 2022. As a result, DNB increased the fine from the standard $2.1 million.
Crypto.com had been operating successfully in the Netherlands, attracting numerous customers while avoiding the financial and compliance obligations that come with registration. However, their failure to report suspicious transactions to the Financial Intelligence Unit-Netherlands was a significant oversight, undermining efforts to combat financial crimes.
Despite the fine, Crypto.com managed to secure its registration in the Netherlands by July 2023. Interestingly, DNB had previously stated that Dutch users could use the platform, even though it was operating without registration.
Comparisons can be drawn with Binance, a rival cryptocurrency exchange, which faced a slightly higher fine of $3.6 million for similar registration breaches. Binance ultimately decided to exit the Dutch market after a failed registration attempt. In contrast, Crypto.com’s response to the fine was relatively nonchalant, dismissing it as a “past and rectified incident” and ensuring business continuity.
Meanwhile, another major player in the cryptocurrency exchange market, Kraken, obtained its fourth European license and proudly announced its registration as a Virtual Asset Service Provider (VASP) with DNB. This VASP license is a crucial part of the new MiCA regulations designed to regulate digital asset businesses within the European Union. Kraken’s entry into the Dutch market, accompanied by regulatory compliance, has the potential to bring significant changes to the competitive landscape. Approximately 20% of Dutch citizens reportedly own cryptocurrencies, making the country an attractive market for crypto services.