Dutch Central Bank recorded a violation by Coinbase
The Dutch Central Bank has ordered the European division of the cryptocurrency exchange Coinbase to pay a fine of 3.3 million euros. Initially, the amount was 2 million euros, but later it was increased due to the seriousness of the situation.
The reason for this was the lack of necessary registration of the exchange. According to the representatives of the Dutch Central Bank, from November to August 2022 the European division of Coinbase did not comply with all requirements of the regulator. This means that the company had no right to operate in the country.
Representatives of the bank noted that the precondition for the imposition of the fine was an investigation conducted by the regulator. According to its results, at the time Coinbase began operating in the Netherlands, the exchange did not comply with a number of requirements. It is primarily about passing the mandatory registration with the Central Bank. The procedure corresponds to the local law regulating the issues of combating money laundering and terrorist financing. The European division of the site only after some time has passed all the necessary stages and received approval from the regulatory authorities.
The Dutch regulator introduced mandatory registration for cryptocurrency exchanges and companies that provide services in the digital currency market in May 2020. The reason for this decision was an increase in the risks that contribute to money laundering through various crypto services. For example, the anonymity of such transactions significantly increases the likelihood of using assets for illegal purposes.
Due to the introduced requirements, the Central Bank increased the efficiency of the prevention of illegal financial transactions. Failure to comply with the designated rules was the reason for the regulator to impose a fine on Coinbase, which is classified in category 3. According to the bank’s policy, the standard amount of compensation, in this case, is 2 million euros, and the maximum is 4 million euros. However, due to the seriousness of the violation, the regulator decided to increase the fine to 3.3 million euros. At the same time, the bank took into account the fact that during the work without permits, the exchange made efforts to obtain registration.
It should be noted that the European Union Parliament has strengthened control over the crypto industry. The authorities voted for a new bill, according to which banks storing cryptocurrencies will be subject to strict restrictive measures. They must increase their capital levels to protect themselves from market fluctuations without using taxpayer finances.
Banks need to plan for a probable capital loss of 1,250% given the risks of the crypto market. Institutions must have the necessary capital buffer to compensate for losses in the value of digital assets. The government requires banks to have 1 euro in their own capital for every euro they hold in cryptocurrency. According to the EU authorities, such an approach will minimize risks in case of instability in the crypto industry.