The charge sheet from the DNB outlining its decision to impose a sanction of $3.6 million for serving local customers without approval shows multiple legal and procedural gray areas
Coinbase’s fine for ‘very serious’ breaches of Dutch crypto registration procedures has revealed some of the many drawbacks the industry faces as it works towards operating within the regulatory fold.
The Dutch central bank’s (DNB) charge sheet outlining its decision to impose a fine of 3,325,000 euros ($3.6 million) for providing services to local customers without approval reveal legal drawbacks. Coinbase, which is registered with the Dutch central bank now, argues it is being punished for co-operating.
The size of the fine matches the one imposed on crypto exchange Binance last year, and for similar reasons. The Dutch central bank argues it is justified by the scale of the violation, though Coinbase can still appeal, and may yet do so.
Coinbase originally applied for registration in September 2020 to offer exchange and wallet services, but it withdrew the application a few months later, unable to meet the standards set by the DNB under an anti-money laundering law which has also applied to crypto since 2020.
Registration is a legal requirement to serve the Dutch market, but Coinbase didn’t gain the registration until 2022 – during which period it saw huge growth worldwide.
The violation period was nearly two years, during which the number of Dutch customers also doubled, the DNB’s enforcement order said. Dutch central bank therefore regards these violations as very serious.
As a provider of crypto services globally, Coinbase should have been aware of the applicable laws and regulations, DNB added. Dutch central bank considers that Coinbase’s actions are highly culpable.
The tough stance does not come as a surprise from a country which has been sceptical about retail access to crypto derivatives. The Dutch central bank has also issued warnings over KuCoin operating without a registration, and the central bank’s governor, Klaas Knot, has hit out at underregulated crypto havens.
In a tweet on Thursday, Paul Tang, said the low level of the fine for selling risky products without a license was a ‘joke,’ comparing the $3 million figure to the billions lost by investors in last year’s crypto crash.
A Coinbase spokesperson told CoinDesk that it is still committed to compliance, but disagrees with the fine and is now considering whether to appeal. The spokesperson said that the company ‘should not be penalized for playing by the rules, implying the DNB has unfairly targeted those who at least tried to engage with the process, and not those who ignored it entirely.
