Netherlands hits KuCoin with regulatory warning

abdelaziz Fathi

The Dutch Central Bank is warning investors that KuCoin – the fourth-largest crypto exchange in the world by trading volume – is operating in the Netherlands without being authorised to do so.

The central bank also fired a warning shot across the bow of unlicensed platform selling cryptocurrency to locals, charging them with breaching the country’s securities regulations.

“This means MGL is not in compliance with the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft) and is illegally offering services for the exchange between virtual and fiduciary currencies and it is illegally offering custodian wallets,” the bank said.

The regulator assured KuCoin customers that they are not in violation. However, their trading with the unregulated firm increases the risk of customers becoming involved in money laundering or terrorist financing.

KuCoin, established in September 2017, is one of the popular cryptocurrency exchanges, having handled almost $423 million worth of cryptocurrency transactions over the last 24 hours, according to Coinmarketcap.com.

To encourage regulated business within the crypto industry, the country adopts a licensing scheme for digital assets services after the amendment it introduced two years ago to the EU’s Money Laundering Directive. The Dutch government also introduced  a raft of new regulations, including tougher KYC rules for digital currency transactions. The authorities want to prevent anonymity in cryptocurrency transactions thereby placing a ban on anonymous crypto accounts.

Earlier this year, the Dutch central bank fined Binance €3.3 million as the crypto exchange was providing its services in the Netherlands without the required registration.

Binance was originally hit by an administrative fine of a €2 million base amount. However, the DNB said the penalty was increased as the exchange benefited from lower costs because it hadn’t paid registration fees and other regulatory charges, unlike its competitors.

The Dutch central bank also cited Binance’s large client base in the country and its huge trading turnover as additional reasons to hike its fine. Overall, the cryptocurrency exchange was not in compliance with anti-money laundering or anti-terrorism financing legislation in the Netherlands.

Regulators in Britain, Germany, Hong Kong and Italy have earlier voiced similar concerns and have stepped up pressure on Binance. However, the world’s largest crypto ecosystem has recently secured many approvals in European countries.

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