How the Rotterdam Court Ruling affects the registration regime for Crypto Services Providers in the Netherlands
On 4 October 2023, the District Court of Rotterdam ruled that the Dutch registration regime for crypto services providers goes beyond the scope of the registration requirement set out in the Fifth Anti-Money Laundering and Anti-Terrorism Financing Directive. Soeradj Ramsanjhal and Roderik Vrolijk explain the practical implications of this ruling.
Ten crypto service providers objected and appealed against the fees that the Dutch Central Bank (De Nederlandsche Bank, "DNB") charged with respect to their registration and ongoing supervision. The two cases relate to the years 2020 and 2021. The judgments can be found here and here and refer to certain (technical) aspects relating to supervision costs that DNB charged. We only highlight the references in the rulings to the legality of the Dutch registration regime.
The District Court of Rotterdam (the “Court”) ruled that the information that DNB requires under the Dutch Anti-Money Laundering and Anti-Terrorism Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme, the "Wwft") is significantly more than the information that should be required to only register a crypto services provider in the Netherlands. Although DNB requires this information based on the Wwft, these requirements have no legal basis in the Fifth Anti-Money Laundering and Anti-Terrorism Financing Directive ("AMLD5"). The Court refers to the advice of the Dutch Council of State (Raad van State) in 2019, specifically with respect to the fact that the registration regime cannot de facto mean that it would become a licensing regime. The current Dutch registration regime, however, functions as a licensing regime, as DNB requires extensive information from the applicant, for example relating to its policies on sound operational business conduct. The Court ruled that DNB may not require more information than the information required to register crypto services providers in accordance with Article 47 of AMLD5.
The ruling confirms the position taken by crypto services providers and several authors over the past few years: the scope of the Dutch registration regime goes beyond what is allowed under AMLD5. This ruling may therefore also have consequences for future Dutch implementations of EU Directives in light of the EU duty of conforming interpretation of Directives. Here lies also a responsibility for the Dutch legislator to review the scope of EU Directives carefully.
In any case, the regulatory regime applicable to crypto services providers will soon be materially impacted by the Markets in Crypto Assets Regulation ("MiCAR") which entered into force in June 2023. Most of its provisions will apply on 1 January 2025. MiCAR will, among other things, introduce licensing and conduct of business requirements for crypto services providers. Until MiCAR applies, DNB will have to apply the registration regime for crypto services providers in line with AMLD5, unless DNB successfully appeals against this ruling.
Please contact us if you wish to discuss any of these matters.
