On Wednesday, a court in Rotterdam, Netherlands, ruled that the Dutch Central Bank (DNB) went beyond its legal powers to charge crypto companies a hefty $2.3 million in fees to register for anti-money laundering purposes.
The central bank charges an annual fee for the supervision of financial institutions and has been doing this with crypto service providers since 2020. However, several crypto firms, including exchanges Bitvavo and Binance’s Dutch successor Coinmerce, did not agree with the ruling and decided to appeal in court against the supervision costs that were charged to them for 2020 and 2021.
The firms argued that the registration regime they have been subject to since 2020 does not intend to pass on the supervision costs to them as crypto companies cannot be regarded as “persons under supervision”.
Dutch Court Says Supervision Charges Imposed On Crypto Firms Was Unlawful
However, the court did not side with the companies, as in its opinion the registration obligation for crypto service providers is not related to the passing on of the supervision costs to them. The judges argued that under legal provisions, crypto companies must be regarded as persons under supervision because the rules are still consistent with general norms of good governance.
The court did agree with the companies regarding the way in which the DNB assessed its anti-money laundering supervision registration request because it was contrary to the scope of the registration obligation for crypto service providers laid down by the European Union in its amended Fourth Anti-Money Laundering Directive (AMLD5).
The Rotterdam court ruled that the Dutch central bank incorrectly charged crypto service providers in 2021 as they fell outside the scope of its registration requests as per AMLD5. Prior to that year, crypto firms were not obliged to pay for supervisory costs are there was no registration required for crypto companies to comply with the anti-money laundering directive.
Therefore, the court declared that it was wrong for the DNB to incur any registration costs from crypto firms in 2020 and 2021 as it was not possible to lawfully charge the fees. As for the fees charged in 2022, there is a separate lawsuit that is still ongoing.
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Crypto Exchanges Are Quitting The Netherlands Due To Stringent Crypto Regulations
The Netherlands is on the verge of implementing the EU’s upcoming Markets in Crypto Assets (MiCA) regulatory regime, which has so far taken a strict stance on crypto firms by imposing hefty fines on companies that failed to comply. Meanwhile, a hoard of crypto firms are leaving the Netherlands due to its stringent regulatory requirements.
Recently, crypto exchange Gemini recently announced that it was quitting business in the country. In July, Binance transferred its Dutch assets and customers to rival exchange Coinmerce after it failed to secure regulatory approval to act as a virtual asset service provider.
The world’s largest crypto trading platform was fined $3.6 million by the central bank for serving customers without necessary authorization. Coinbase was also fined the same amount for failing to obtain an operational license to provide crypto services in the Netherlands.
organization was pleased with the court’s findings that the registration obligation from the EU’s AML legislation was violated by the Dutch government.
Patrick van der Meijde, President of the crypto industry group United Bitcoin Companies of the Netherlands (VBNL),
The leader of the group that coordinated the complaint added that the costs incurred should not have been passed on to the crypto firms because they fall outside the DNB’s mandate.
He explained that European financial regulators tend to charge operational costs for supervised entities, in proportion to their size, because the federal agencies are not taxpayer-funded. Last year, the Dutch central bank amassed $2.3 million in supervisory fees from crypto firms. This number is expected to increase every year.
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