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The Dutch central bank to regulate crypto-based service providers

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The Dutch central bank has recently announced that they plan on regulating any organisation that offers cryptocurrency-based services and operating under their jurisdiction, starting from January 10, 2020. As per the reports published on Reuters on September 3, 2019, The De Nederlandsche Bank (DNB) wants to supervise these bodies under the fifth European anti-money laundering (AML) directive. According to a DNB statement:

“Cryptos are vulnerable to financial crime, which is why it is important to set up integrity supervision now.”

Firms operating from outside the Netherlands must comply as well

Businesses that offer services such as an exchange between Cryptocurrency and fiat are now obligated to register themselves with DNB before the 10th of January 2020. The order includes firms that are located outside the Netherlands but serving Dutch nationals even via the internet.  According to a DNB representative:

“It is irrelevant whether they are established in the Netherlands, Also providers that offer such services from another EU member state … for example via a website, must register, regardless of whether the provider is already registered in that member state.”

Failure to comply would result in a Shutdown

During the registration process, the board members and shareholders will also have to go through a thorough assessment and they must show that their processes are capable enough to comply with AML laws and prevent money laundering and illegal financing. The registration period will last six months from the given January date after which failure to comply would result in a complete shutdown of services once the laws come into effect. A part of the statement reads:

“Once a firm is registered and we have assessed board members and other policymakers, we will monitor that it complies with the rules on money laundering and terrorist financing. Firms that do not register will no longer be allowed to provide crypto exchange services and wallets.”

As per the fifth European anti-money laundering (AML), member states must also devise policies regarding crypto regulations before January 10, what regulations must be created or considered is under the discretion of each state. The DNB will also take into account the past actions of the company apart from various other criteria’s which include, “the specific function, the nature, size, complexity and risk profile of the company, and the composition and functioning of the collective.”

This puts all the crypto-based businesses in a tricky situation as they will now have to reveal the identities of their customer in order to continue providing their services in Netherlands. Previously the Netherlands’ Authority for the Financial Markets and De Nederlandsche Bank had suggested that a licensing system should be introduced for cryptocurrency services to further prevent any illicit activities using cryptocurrencies. 

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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