The Dutch central bank, De Nederlandsche Bank (DNB), has fined cryptocurrency exchange Coinbase $3.6 million over its failure to obtain the necessary registration before offering its service to Dutch citizens.
According to a statement issued by the DNB, on January 18, the bank imposed an administrative fine of $3.6 million, or 3.3 million euros, on Coinbase Europe Limited. The bank said the fine was issued because the exchange previously provided crypto services in the Netherlands without registering with the DNB, which is in non-compliance with the law. Firms wishing crypto services in the country must register with the DNB per the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act since May 2020.
According to the DNB, the exchange’s non-compliance with the law is punishable by a category three fine, of which the base amount is 2 million euros. The DNB calculated Coinbase’s fine according to the fixed base amount, which was increased “due to the severity and degree of culpability of the non-compliance.” In its increasing fine, the central bank considered the exchange one of the largest global crypto service providers. Beyond that, Coinbase has a significant number of customers in the Netherlands. Moreover, the DNB argues that Coinbase has enjoyed a “competitive advantage in that it has not paid any supervisory fees to DNB or incurred other costs in connection with DNB’s regular supervision activities.”
The DNB did concede that they reduced the exchange’s fine by 5% because Coinbase always intended to obtain registration with the central bank and was ultimately granted such registration on September 22, 2022. However, the main reason the fine was increased is that Coinbase’s non-compliance persisted over an extended period: from November 15, 2020, until at least August 24, 2022. The bank opines that during that period, “a large number of unusual transactions may have gone unnoticed by the investigative authorities.”
According to reports by Reuters, Coinbase disagrees with the DNB’s fine, saying it “includes no criticism of our actual service” and is considering submitting an appeal. Coinbase has until March 2, 2023, to file an appeal.
Although the DNB did not criticize Coinbase’s service, the fact remains that it was in non-compliance with Dutch law and, as such, should be penalised. Rival crypto exchange Binance was issued with a similar fine in July 2022, also for being in non-compliance with the DNB’s registration requirements, according to a previous report by Reuters.
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