Coinbase charged $3.6M by Dutch National Bank for non-compliance

The Dutch National Bank has charged Coinbase $3.6 million for failing to meet registration requirements before providing services in the Netherlands.

The cryptocurrency exchange has an expansive foothold in the diverse regions where it offers its services. However, a recent report shows that Coinbase failed to comply with the required obligations before offering its services to users in the European nation.

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The Dutch central bank explained that Coinbase operated without a license from November 15, 2020, to August 24, 2022. Thus, it has been fined by the Dutch central bank. On September 22, 2022, Coinbase finally received the proper registration; nevertheless, the DNB claimed that during that time, the company had benefited from a competitive advantage by not paying supervisory costs. 

One of the requirements laid out by the Dutch Central Bank is that cryptocurrency companies looking to offer their services in the Netherlands must register with the DNB under the Anti-Money Laundering and Anti-Terrorist Financing Act.

In an interview with Decrypt, a Coinbase spokesperson informed the company that it did not comply with the DNB’s fine, stating that it was “based on the time it took for Coinbase to obtain our registration in the Netherlands and includes no criticism of our actual services,” adding that the exchange “should not be penalized for playing by the rules and engaging in this process.”

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The sanction got increased from a base amount of $2.18 million due to the severity of the non-compliance, De Nederlandsche Bank (DNB) said in a statement. Also, the report states that the fine is higher because of Coinbase’s size as one of the most popular crypto exchanges in the world—— and the number of customers it boasts of in the Netherlands. Per CoinGecko, Coinbase has hosted more than $2.3 billion in volume over the last day.  

The fine was later decreased by 5% to reflect the fact that the company had always intended to finish registration. Now, the cryptocurrency exchange has until March 2 to contest the fine.

The spokeswoman stated, “While we recognize DNB’s right to enforce its rules, we are carefully reviewing the complaint and appeals process.” Binance received a similar sanction from the Dutch authority last summer for providing its services without a license. The price of Coinbase stock (COIN) is $52.76, down 1.48%.

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Coinbase’s non-compliance and recent effort by regulators to protect users

Many cases like this will emerge in the future, and there will be countless reasons to reference FTX’s devastating meltdown in 2022. The boomerang of the crash has spurred regulators to enact and enforce regulations that protect users from losses that could have been prevented with the necessary measures. Coinbase is the latest company to be fined by these regulators.

To stay operational in different regions, crypto companies must recognise and fully comply with the regulations in place. They present their utilities in this manner as transparent and neutral, with no flaws or underlying schemes to defraud users.

This week, South Africa’s Advertising Regulation Board announced that potential risks and profits should be indicated in ads to be floated by crypto companies. There are more regulations, and crypto companies will have no choice but to comply with these regulations to stay functional and active.