How AMLD5 Regulations Changed the Market in the Netherlands

Crypto regulations are important and without a doubt, private and governmental organizations should work together regarding this topic. However, sometimes due to regulations, small crypto companies may cease to exist, as it costs thousands of euros to comply with requirements.

As can be seen from the example of one small crypto exchange, often it is easier to close the exchange than to comply with regulations. Last week, the founder of exchange Bittr, Ruben Waterman, announced that he plans to close Bittr by April 28.

According to Waterman, Bittr does not have the capital to meet the new requirements. As a reminder, the 5th Anti-Money Laundering Directive (AMLD5) which went into effect in January of this year, changed the situation.

Moreover, the Dutch National Bank estimates that a company should spend $36,500 only to register. There are other fees as well connected with compliance needs.

Crypto exchanges and regulations

Waterman’s crypto exchange does not have the capital to meet with requirements. For example, a company should hire a compliance officer, another option was to keep a lawyer on retainer. There is another option as well. A company should find a third party, that will manage compliance costs in addition to the government registration fee.

In the case, Bittr it was impossible to meet the requirements, given the firm’s small size. Ruben Waterman is the sole shareholder as well as the director of this crypto exchange. It was tough to comply with regulations.

There are other issues as well. According to the Bitcoin firms, financial regulators created a de facto licensing regime whereas the AMLD5 only called for mere registration of cryptocurrency companies.

Moreover, the Dutch Council of State, a governmental advisory board also supported the allegations presented by Bitcoin companies. The Dutch Council of State asked the financial agencies to clarify their proposals. Lawmakers, as well as financial regulators, should come up with a plan on how to support small exchanges while adhering to the regulations.