Dutch Regulator Fines Bybit $2.45M for Registration Violations

TLDR

• Dutch Central Bank fines Bybit $2.45M for unregistered operations
• Violation centered on AML and counter-terrorism financing requirements
• Fine must be addressed by mid-December 2024
• Bybit operated without proper registration in Netherlands
• Similar regulatory issues faced in France with AMF warning

In November 2024, cryptocurrency exchange Bybit received a €2.25 million ($2.45 million) fine from the Dutch Central Bank (DNB) for operating without proper registration in the Netherlands.

This penalty marks one of the largest regulatory actions against a crypto exchange in the country’s history.

The DNB discovered that Bybit Fintech Limited had been actively providing cryptocurrency services to Dutch customers without meeting the mandatory registration requirements.

These requirements are designed to ensure compliance with anti-money laundering (AML) and counter-terrorism financing regulations.

According to DNB officials, Bybit’s unauthorized operations continued for an extended period, during which the exchange served Dutch customers without adhering to local financial regulations.

The lack of proper oversight raised concerns about potential risks related to money laundering and other financial crimes.

The fine amount was determined based on the severity and duration of the violations. DNB officials noted that the exchange had ample opportunity to register its operations but failed to do so.

The registration process is mandatory for all crypto service providers operating in the Netherlands.

Dutch regulations require cryptocurrency exchanges to maintain detailed records of transactions and customer identities.

These rules help authorities track potential illegal activities and ensure the safety of the financial system. By operating without registration, Bybit bypassed these crucial oversight mechanisms.

The exchange now faces a deadline in mid-December 2024 to either pay the fine or contest it through legal channels.

As of the announcement, Bybit has not publicly stated whether it plans to appeal the decision or comply with the penalty.

This regulatory action in the Netherlands follows similar concerns raised in other European jurisdictions. Just six months prior, French financial regulators at the Autorité des Marchés Financiers (AMF) issued a warning about Bybit’s unauthorized operations within France.

The French warning highlighted that Bybit was not registered as a digital asset service provider (DASP) in the country. This pattern of regulatory issues across multiple European nations suggests a broader challenge with compliance in the region.

Dutch authorities emphasized that the fine serves as a clear message to other cryptocurrency companies operating in the Netherlands.

The DNB stated that registration requirements are non-negotiable and essential for maintaining the integrity of the financial system.

The size of the fine reflects the DNB’s serious approach to enforcement. At €2.25 million, it represents one of the larger penalties imposed on a crypto company in the Netherlands for registration violations.

Current regulations in the Netherlands require crypto service providers to register with the DNB and demonstrate compliance with AML protocols. These include customer due diligence procedures, transaction monitoring, and reporting suspicious activities.

Local financial experts note that the Dutch regulatory framework aims to create a balanced environment that allows for innovation while protecting consumers and preventing financial crimes.

The DNB’s action against Bybit comes amid increased scrutiny of cryptocurrency exchanges worldwide. Regulators are particularly focused on ensuring compliance with AML regulations and registration requirements.

For Dutch customers of Bybit, the regulatory action raises questions about the future of their access to the platform. The DNB has not specified whether Bybit must cease operations in the Netherlands immediately.

The case highlights the growing enforcement actions by European regulators in the cryptocurrency sector, as authorities work to bring digital asset service providers under proper oversight.