Dutch-based Bitcoin exchange, Bitonic sued the central bank over crypto wallet KYC. The exchange platform went to a Rotterdam court to file a preliminary injunction for the central bank to suspend the wallet verification rule.
KYC is not new in the Netherlands, as DE Nederlandsche Bank (DNB) enacted a rule for crypto exchanges to comply with KYC rules. For the KYC, withdrawal wallets were not an exception, but unfortunately, Bitonic was not for the idea.
It is not the only one that found the KYC rules to be stringent as there are 25 out of the 38 that found the rules strict and sent a joint letter asking for clarification. Bitonic was on the front line during that time as it has one of the three licenses that DNB had given out from its 38 applications.
From Bitonic’s announcement, it’s DNB’s fault as it failed to address the issues raised over its controversial KYC rule. There is an independent compliance firm that agreed that the central bank did not have any legal merits to support its verdict.
Bitonic found the rules controversial as the sweeping wallet verification protocol was violating the privacy laws. The exchange platform wanted DNB to clarify whether its requirements were legitimate.
Bitonic announced its objective of the lawsuit is to stop the processing of personal data that it was required to. As a company, Bitonic wanted to be in a situation where they do a risk analysis and decide on the KYC to use.
To counter its move, the company is being forced to drop the lawsuit to have a dialogue on the issue.
The exchange made it clear that it has the support of other exchanges on the matter. The only exchange that was not against the central bank’s moves is Bitstamp, which made it get a lot of criticism. The court is likely to give an ear for the sake of the crypto-industry and its customers.
The stringent KYC requirements are an issue for crypto traders. Many conditions are an invasion of privacy, which is the main point for cryptocurrencies.