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Dutch Bitcoin Exchange Files Preliminary Injunction to Suspend Wallet Verification Rule Enacted by the Netherlands

Dutch Bitcoin Exchange Files Preliminary Injunction to Suspend Wallet Verification Rule Enacted by the Central Bank

A Dutch bitcoin (BTC) exchange has
filed a preliminary injunction at a court in Rotterdam to suspend
the central bank’s additional wallet-verification requirements.
Bitonic seeks to challenge the new rules enacted by the De
Nederlandsche Bank (DNB) on Sept. 21, 2020.

Dutch Exchange Argues Additional KYC Rules Lack ‘a Proper Legal
Basis’

Per the bitcoin exchange’s
announcement
, the additional know your customer (KYC)
requirements imposed by the central bank violate users’ privacy.
However, the crypto firm clarifies that the legal obligations
“are not under discussion” within this case.

A section of the first set of rules published by
the Dutch central bank in 2019 reads:

Crypto service providers must check whether their clients and
any ultimate beneficiary owners (UBOs) are on a Dutch or European
sanctions list and report any hits to DNB. Risk-based checks are
not permitted … Compliance also entails that institutions must
check incoming and outgoing payment transfers.

But when Bitonic was
granted
registration as a “provider of crypto services” by
the DNB, they were required to comply with the new measures that
they disagreed with in the first instance. At the time, the bitcoin
exchange said:

From now on, we are required to ask additional details such as
the purpose with which you intend to purchase bitcoins and what
kind of wallet you use. Furthermore, we are obligated to verify
that you are the legitimate owner of the given bitcoin address by
requesting you to upload a screenshot from your wallet, or by
signing a message.

Following independent expert advice, the company claims the
additional KYC requirement “lacked a proper legal basis.”
Bökkerink Compliance International provided the advisory.

The Netherlands-based bitcoin exchange commented on the
matter:

We did not receive a convincing answer to the fundamental
questions [from the DNB] we raised on this matter during the
registration process. In addition, we are also still awating a
reply to a letter to DNB, sent in early November 2020 by 25 of the
38 registering parties. Meanwhile, we are for some time now, forced
to work in a way that violates privacy rules. To avoid doing so, we
asked DNB again, early this year, to revoke the requirement. This
request was denied with a referral to the Sanctions Act. However,
we do not agree with that explanation.

KYC Rules Are Still a Controversial Hot Topic Among the Dutch
Crypto Community

The history of the Netherlands looking to regulate the crypto
industry dates back to 2018. The government
argued
that they wanted to prevent money laundering and alleged
terrorist financing that cryptocurrencies could be favoring.

However, the KYC measures implemented by the Dutch central bank
sparked controversy among the local crypto community. In fact,
Dutch users have been complaining
on social media about crypto exchange Bitstamp’s passivity to
challenge the DNB’s rules.

What are your thoughts on the reasons behind this
preliminary injunction? Let us know in the comments section
below.

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Translator / 翻译者 / Traductor