Bitonic is registered with the Dutch Central Bank: our vision
Starting today, Bitonic is officially listed in the crypto-register of the Dutch Central Bank (DNB). We have implemented all required measures and may now continue our services to our customers. In response to further questions, we outline our vision on the legal requirements. These originate from the fifth European Anti-Money Laundering Directive (AMLD5) which is implemented via changes in the Dutch anti-money laundering law.
The standard requirements
The Dutch legislation obliges us to verify our customer’s identities through passports,ID cards and/or drivers licences. This applies to all amounts, meaning even customers buying bitcoins for an amount as little of €5, are already required to identify themselves with a passport or ID card.
In addition, we are required to check transactions and monitor their origin and behavior based on risks. These risks are based on certain characteristics, in order to prevent fraud, money laundering and terrorism financing. This includes checking our customer database for the presence of sanctioned persons. We also report unusual transactions.
Sanctions Act: an illegitimate requirement
The DNB has demanded, as a part of the registration procedure, that Bitcoin companies must be able to link Bitcoin wallets to identities, as if it were a bank account. Without implementing these measures, we would not have been granted the registration and we would have had to cease all our operations on 21 November 2020.
Since Bitcoin does not work on the basis of identities, this is practically and technically unworkable. Until the very last moment we’ve tried to get the DNB to change its mind, but unfortunately without success. DNB remained of the opinion that the requirement finds its origin in the Sanctions Act. We disagree and repeatedly asked for this requirement to be taken off the table, however with little success.
Bitonic's vision
Bitonic has mixed feelings about the new legislation. On the one hand, it would be expected that legislation would eventually come into effect and that creates a certain legitimacy of the market. We are of course also in favor of combating fraud, money laundering and other criminal activities.
On the other hand, we are very concerned about proportionality, the criminalization of the industry and especially the privacy of our customers. We see that European legislation has been introduced in other European countries with a greater understanding of the market and technology. Of all those countries, the Netherlands appears to face the most extreme demands, and we are very disappointed by this.
The Netherlands: an innovative country?
Even though the government always insists that innovation is its highest priority, none of this is reflected in the treatment of our industry. The proportionality of the requirements is hard to defend and Dutch people or people who like to do business with a Dutch company are criminalized, everyone involved is deemed to be a suspect.
This is in stark contrast to the claim of Dutch government that it stimulates an innovative business climate. It appears that instead, fear and the desire to create a (false) sense of security are more important drivers of the government agenda. Bitcoin is a decentralized money system based on mathematics & physics, it belongs to no one and thus facilitates worldwide innovation. However, the companies that trade in bitcoin are treated with an extremely conservative and fearful world perspective. This leads to supervision that is much more burdensome than is appropriate for the actual risks that exist.
Privacy
Bitonic has always been an advocate for privacy and will always continue to fight for the privacy of our customers. This new law is disproportionate to its cause and we are very concerned about the privacy of average citizens. The right to privacy is always put in second place by anti-money laundering and terrorist financing rules, which is how one ultimately creates a society based on distrust and control.
Bitcoin stands for financial freedom and this freedom also includes financial privacy. From this perspective, the fact that all kinds of personal data end up in the hands of companies is a paradox, as well as a great risk. We will always be critical towards such intrusive requirements. We do not only have a legal duty to respect those surveillance-laws but a similar duty to respect and safeguard human rights such as privacy and the presumption of innocence.
Independent legal verdict
We consider the whitelisting and verification of bitcoin addresses to be illegitimate, disproportionate and ineffective. It provides a false sense of security and we have implemented the measures under protest. We will put our objections on this issue forward for evaluation by an independent judge, so that a proper assessments of its legality and proportionality will be obtained. To be continued.