The Dutch central bank has fined Binance more than €3mn for offering services without proper registration in a blow to the crypto exchange’s campaign to win over European regulators.
The central bank said on Monday that the world’s largest crypto trading platform had breached its rules, which require digital asset companies to register in order to offer services in the Netherlands.
The administrative fine against Binance had been increased because of the seriousness of its breach of Dutch standards, the bank said. The exchange benefited from a “competitive advantage” from not paying levies to the bank and skipping out on compliance costs, and had been violating the rules over a long period, beginning in May 2020, the bank added.
However, the central bank said the fact that Binance had now applied for regulation weighed in its favour, reducing the total fine.
The censure from the Dutch watchdog underscores a widening split among European financial regulators on their attitudes towards the exchange. Binance has been rebuked by dozens of regulators around the world over concerns about its policies to prevent money laundering and protect consumers as well as for operating without permission.
In the UK, the Financial Conduct Authority has been outspoken on the risks presented by the sprawling crypto exchange, issuing a consumer warning against Binance in June 2021. The FCA also said it did not consider Binance to be capable of being effectively supervised as it warned its “complex and high-risk financial products” posed “a significant risk to consumers”.
In contrast, France, Spain and Italy have in recent months opened their doors to the exchange. The nod from France’s Autorité des Marchés Financiers drew criticism from French MEP Aurore Lalucq, who described the decision as “incomprehensible”.
Lalucq added that France’s decision was “surprising and even worrying . . . especially since many other supervisors, and not the least significant ones, have already refused to give Binance any form of registration or approval”.
Binance described the regulatory rebuke in the Netherlands as a “long-awaited pivot in our ongoing collaboration with the Dutch central bank.”
“While we do not share the same view on every aspect of the decision, we deeply respect the authority and professionalism of Dutch regulators to enforce regulations as they see fit,” the exchange said, adding that it was now “pursuing a more traditional operating model in the Netherlands.”
The Dutch central bank previously raised concerns about the exchange, issuing a public warning against Binance in August last year. “Binance is providing crypto services in the Netherlands without the required legal registration”, the bank said at the time, saying the exchange’s lack of a proper registration increased the risk of customers “becoming involved in money laundering or terrorist financing”.
Binance has pledged to establish a formal headquarters and regularise its corporate structure after operating for several years as a “decentralised” organisation. The promise to reform represents a concession to regulators, which had been put off by the business’s irregular set-up.
The group has also said it has rapidly ramped up its hiring of compliance staff and enforcement efforts as it seeks to bolster its regulatory credentials.