Bitonic, the oldest Bitcoin exchange in the Netherlands, recently had its day in court with the Dutch Central Bank (DCB). At issue was the legitimacy of DCB’s mandate that Bitonic (and other Bitcoin exchanges and custodians operating in the Netherlands) implement very stringent “address verification procedures” in order to obtain the legally required registration with the DCB.
The judge’s opinion in the case was generally favorable towards Bitonic’s complaints, and, on April 7, she gave the DCB six weeks to review its policy. Wednesday evening, the DNB formally acknowledged the legitimacy of Bitonic’s complaints and revoked its mandate for stringent address verification requirements as part of the registration regime.
The victory is crucial to the continued vibrancy and profitability of the Dutch Bitcoin industry.
Background To The Court Case
The run-up to the court case already started back in May of 2018, when the European Union passed the fifth Anti-Money Laundering Directive (AMLD5).[1] This directive required the member states of the European Union to implement into their laws certain regulations for cryptocurrency exchanges and custodians.
Broadly speaking, AMLD5 demands that cryptocurrency exchanges and custodians (1) perform background checks on their customers, (2) monitor and report unusual transactions, (3) and register with a relevant regulatory authority.
Implementation of the AMLD5 directive into Dutch law was somewhat chaotic and contentious to say the least. The main discussion point centered on the AMLD5’s mandate for a registration regime (requirement 3 above).
Initially, the government’s concept implementation of AMLD5 into the law at the end of 2018 called for a licensing regime, rather than a registration regime. The former is a much more burdensome requirement than the latter.
This resulted in substantial push-back from the Dutch Bitcoin industry and various other actors, including the Netherlands’ Raad van State,[2] a
