Bitonic Exchange Sues Dutch Central Bank Over Controversial Crypto Wallet Verification Law
- Dutch Bitcoin exchange startup Bitonic has sued the country’s central bank concerning the new law on verifying crypto wallets.
- The court documents filed in a Rotterdam court ask the court to strike off the country's central bank's controversial wallet verification policy.
De Nederlandsche Bank, DNB, came up with a policy in November 2019 requiring crypto exchanges to ensure that their clients adhere to strict Know Your Customer procedures. The new policy comprises verification procedures for withdrawal wallets that Bitonic is terming as an unnecessary and unwarranted nuisance.
At the time of issuance of this policy, there were only three licensed exchanges in the country despite 38 applications to the regulator; Bitonic was one of the licensed exchanges. However, 25 of the applicants also questioned the policy by DNB, asking the regulator to clarify the need for such strict compliance procedures.
Bitonic now claims that DNB has not addressed its concerns despite numerous formal letters about the contested KYC protocols. On this basis, Bitonic sought expert advice from an independent compliance company on the issue, which opined that the DNB’s actions are not based on any legal background.
Bitonic argues that by forcing crypto exchanges to implement the controversial KYC rule, DNB will breach client privacy rights. The crypto exchange now wants the judge to determine if DNB’s position on the requirements are legitimate and based on any legal merit. A statement by the company reads,
“Our objective is to be able to quickly halt the comprehensive processing of personal data imposed on us. We want to return to the situation where we ourselves determine, on a risk-based basis, whether we ask the customer to prove his management of the wallet.”
The exchange stated that it regrets that it has to seek redress from the courts, saying that their action was warranted by DNB’s failure to engage in constructive dialogue with the matter.
DNB is yet to issue any statement in regards to the matter.