Has the Dutch Central Bank overstepped a boundary?

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On November 16th, the Dutch digital currency exchange ‘Bitonic’ added additional verification measures at the request of the Dutch Central Bank–De Nederlandsche Bank (DNB). 

From now on, we are required to ask additional details such as the purpose with which you intend to purchase Bitcoins and what kind of wallet you use. Furthermore, we are obligated to verify that you are the legitimate owner of the given bitcoin address by requesting you to upload a screenshot from your wallet, or by signing a message.

Said Bitonic in its official announcement, after they expressed how disappointed they were with the new requirement.

“Starting today Bitonic has (under protest) added an additional verification measure regarding Bitcoin addresses,” said Bitonic. “The Dutch Central Bank (DNB) has effectively forced us to do so in reference to the Sanction Act.”

Cracking down on digital currency exchanges

The European Union’s Fifth Anti-Money Laundering Directive (AMLD5) has changed the landscape of the digital currency industry in the E.U. AMLD5 requires digital currency companies that provide fiat/digital currency transactions and custody services to register with their local regulator and strictly adhere to Know-Your-Customer and Anti-Money Laundering procedures. The Dutch Central Bank required digital currency companies to register with the DNB by May 18th, otherwise, they threatened to send a cease and desist order to the business.

But is the DNB beginning to overstep a boundary as well as misinterpret AMLD5? According to some, no other country in the European Union is requiring the digital currency exchanges in their country to have their users verify that they are the owner of a wallet by uploading a screenshot of their wallet or signing a message as proof.

As imposed by the Dutch central bank (@DNB_NL), Bitcoin exchanges in The Netherlands must now ask their customers to "prove" they really control their withdrawal address. No other European country requires this.

Via @Bitonic: https://t.co/UEtVJD3e5z. pic.twitter.com/Nbsa9usSWF

— Aaron van Wirdum (@AaronvanW) November 17, 2020

Bitonic is not a fan of the new requirements and says that they have plans to push back,

We understand that these additional measures cause nuisance for our customers and we do not agree with the measures ourselves. Therefore we offer the opportunity to formally object to these additional measures and the registration of this data. We will soon release a custom form intended specifically for this purpose. For the time being, you are invited to send complaints to [email protected].