Why Coinbase Has Been Slapped With a $3.5 Million Fine in the Netherlands

Coinbase has been fined $3.5 million (roughly Rs. 30 crore) in the Netherlands. The Dutch central bank has served the crypto exchange with a legal notice for offering crypto services in Netherlands without completing the required procedures, including registration. In May 2020, the Netherlands mandated crypto-related companies to register as official money transmitters. The country is aiming to curb the misuse of cryptocurrencies for money laundering.

The fine levied on Coinbase by De Nederlandsche Bank (DNB) is a notch higher than the base amount of $2 million (roughly Rs. 16 crore) that can be issued under the law. As per a Bitcoin.com report, the penalty amount has been decided based on the “severity and degree of culpability of the non-compliance”.

The Dutch central bank has claimed that Coinbase was operational in the country without a registration for nearly two years, between November 2020 and August 2022.

In this period, the bank claims, Coinbase was not able to report details on suspicious transactions to the authorities. Nefarious actors could have exploited this window to facilitate illicit cross border payments that could have gone undetected.

The crypto exchange can raise an appeal against the DNB decision till March.

The report further states that the exchange said it disagrees with the decision and is considering an appeal.

Coinbase obtained an operational registration in Netherlands last September.

In December, Coinbase said it recorded a 66 percent increase in requests that it received from law enforcement agencies throughout the year. These requests from Netherlands rose by 163 percent, Coinbase had said at the time.

Analytics firm Triple-A estimates that Netherlands housed over 520,000 crypto holders as of 2021.

Amid the growing number of crypto investors, the nation is taking a strict approach towards enforcing the Anti-Money Laundering and Anti-Terrorist Financing Act.

Coinbase rival Binance also faced a similar fine situation in Netherlands over the same reasons last year.