Last year, De Nederlandsche Bank imposed some legal restrictions against the crypto exchange platforms that were operating under their jurisdiction. It has been a common practice for central banks to pick a bone with crypto marketplaces. Following the tradition, DNB conditioned that the users of these exchanges had to collect additional data provided by their users. As per the bank authorities, these restrictions were in line with the KYC or know your customer rule.
After these new regulations were introduced, Bitstamp and Bitonic transformed their platform to make room for this additional information. On the other hand, some users were not sure that they would like to make room for these amendments. However, Bitonic went to court and filed for a preliminary injunction against DNB in a Rotterdam court.
Dutch Exchange Celebrates Major Victory against the Central Bank Authorities
When a preliminary relief Judge decided to permit the prosecution for having the legal right to question the intervention of the bank, it decorated the stage for a tough legal battle. The Bitonic team declared in court that it would be impossible to monitor every transaction and every account user successfully with the proposed methods. The prosecution also argues that taking screenshots of the account is not technically viable as it encompasses the breach of privacy.
Bitonic first registered the complaint in March 2021. The users of the exchange had to provide image-based or photo proof that the accounts they are operating belong to them. The preliminary judge of Rotterdam District court also issued instructions to consider all the technical aspects of the case and issue a judgment within six weeks. The court also gave DNB enough time to reconsider all objections submitted by the exchange platform in detail.
At first, it seems like this is a victory for the exchange platform. However, at the base, the sympathies of the court seem to side with consumers’ safety and security. The judgment construes that Bitonic and other exchange platforms are free to choose other methods to verify the identity of their consumers. Bitonic authorities have told the media that they would remove the photo evidence restriction from their platform as soon as possible.
Meanwhile, the court and the central bank also directed the exchange platforms to introduce new KYC protocols that would verify the users and protect the interest of investors at large. Without the presence of KYC regulations, the platform would have no way to verify that the person withdrawing funds from a wallet is the real user or any hacker/scammer, etc.