The Dutch Central Bank (DNB) has imposed new limitations on cryptocurrency exchanges with an additional verification measure regarding bitcoin (EXANTE: Bitcoin) addresses. According to the local cryptocurrency exchange Bitonic, the DNB has "effectively forced" it to enhance verification process in reference to the Sanction Act.
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According to the watchdog, crypto providers must check whether their clients and any ultimate beneficiary owners are on a Dutch or European sanctions list and report any hits to DNB. The Sanction Act compliance also entails that institutions "must check incoming and outgoing payment transfers, and block and report them to DNB in the event of a hit."
"We have repeatedly pleaded DNB to drop this requirement as we find this measure to be ineffective and disproportionate. Unfortunately this has had no effect," Bitonic added.
The exchange's team stressed that the Netherlands is the only country in the EU where "far-reaching measure is demanded."
With the new rules, Dutch exchanges are required to ask additional details such as the purpose with which a user intends to purchase BTC and what kind of wallet might be used. The exchanges are also obligated to verify that a user is the legitimate owner of the given bitcoin address by requesting to upload a screenshot from the wallet, or by signing a message.
Bitonic added it will offer soon the opportunity to formally object to the limitations with a custom form intended specifically for this purpose.
In May 2020, the Netherlands-based cryptocurrency exchange BitKassa decided to close down its services due to the excessive demands of the DCB. The exchange said that the Dutch Ministry of Finance did a great job serving the Dutch Central Bank "in enforcing unreasonable regulation upon Dutch Bitcoin companies."
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