Crypto.com has recently faced a hefty fine of €2.85 million ($3.1 million) from the Netherlands Central Bank for operating within the European country without proper registration for two years. This particular penalty was aimed at Forix DAX Mt, the Dutch trading entity of Crypto.com. The Apex Bank imposed the fine on the crypto trading platform in October 2023, citing the violation of Dutch regulations that require crypto firms to register with De Nederlandsche Bank (DNB) under the Anti-money Laundering and Anti-Terrorist Financing Act for operations within the country.
Severe Consequences
DNB emphasized the severity of Crypto.com’s noncompliance, noting that the platform had gained an unfair competitive edge by evading regulatory fees for an extended period. The regulator pointed out that Crypto.com’s substantial customer base in the Netherlands further exacerbated the violation. The noncompliance persisted from 21 May 2020 until at least 8 November 2022, according to DNB’s examination period, leading to the substantial fine exceeding the base amount of €2 million. This prolonged period of non-compliance was a significant factor in the severity of the penalty imposed on Crypto.com.
Past Incidents
Interestingly, this is not the first instance where DNB has penalized a crypto-related platform for failing to adhere to local regulations. In the previous year, major crypto platforms like Binance and Coinbase were fined over $3 million each for allegedly operating in the country without proper registrations. The consequences of non-compliance with Dutch regulations have been evident in the crypto industry, as seen with Binance’s decision to exit the country due to licensing issues. Despite facing these penalties, Crypto.com lodged an appeal against the fine in October 2023 and took steps to register with the Apex Bank in July, becoming one of the 40 licensed crypto entities in the country.
The case of Crypto.com serves as a cautionary tale for crypto firms operating in the Netherlands and across Europe. Compliance with local regulations, especially regarding anti-money laundering and counter-terrorist financing measures, is essential to avoid hefty fines and potential consequences. The regulatory landscape for crypto entities is evolving rapidly, emphasizing the importance of legal compliance and registration to operate within different jurisdictions effectively. As the crypto industry continues to mature, regulatory scrutiny and enforcement actions are expected to increase, making it imperative for companies to proactively ensure compliance to avoid costly penalties.