Know Your Customer (KYC) policies have become a necessary evil in the cryptocurrency space. Even though the process is designed to guard against illicit activities, it does take away anonymity, the most attractive feature about digital currencies. These days, regulators are ensuring that crypto businesses comply with KYC policies. On a similar note, in order to comply with Dutch regulations, Netherlands-based Bitstamp customers can no longer make withdrawals without first providing photo proof they own the recipient wallet.
According to a letter shared by a Twitter user “Bitcoin Marcus”, the exchange has now banned all Netherlands-based customers from withdrawing their crypto assets to external wallets without a verification proving that they own the wallet that they are transferring the funds to.
The letter states that Bitstamp’s users in Holland must submit third-party addresses alongside photographic evidence they own the wallet, to add it to the white list before any withdrawals are processed.
“Whitelisting is a security feature which was already available at Bitstamp, but now it has become obligatory for all customers affected by the new regulation in the Netherlands,” the letter stated.
The rules come as a result of new anti-money laundering laws that were drafted by the Dutch government back in November 2019 and passed a year later. Per the regulations, “crypto service providers must check whether their clients and any ultimate beneficiary owners are on a Dutch or European sanctions list” before providing services, and monitor all “incoming and outgoing payment transfers.”
Crypto Community not happy
However, Bitstamp isn’t the first exchange in the Netherlands to comply with this. Back in November, another Netherlands-based Bitcoin exchange Bitconic announced that customers needed to comply with the new verification measures for withdrawals. The exchange called these regulations “a nuisance.”
Likewise, not all customers were happy about the new rules. Bitstamp users went ahead to criticize the regulations. One Twitter user mockingly wrote:
“Clearly, the next step will be to make people responsible for all subsequent transactions from that whitelisted address.”
A part of the crypto community even thinks these regulations could be the inspiration for what was recommended by U.S. Treasury Secretary, Steve Mnuchin for self-hosted crypto wallets. Major industry leaders like Coinbase CEO Brian Armstrong. Crypto analyst PlanB was the first to suggest this: