BaFin Head: Crypto Regulation Needs to Be Global

If crypto assets want to be embraced by the mainstream finance world, they need to be regulated the same way as mainstream financial products, Germany’s chief regulator said Monday (Nov. 14).

Speaking at an event in Frankfurt — as reported by Bloomberg News — BaFin President Mark Branson said the recent crypto crash was fortuitously timed since there are still limited ties between digital assets and traditional finance.

Although Branson reportedly took questions about the recent collapse of FTX group, he didn’t address any crypto companies by name, the report said.

“What was especially disturbing about what we’ve seen in the last days, weeks and months is the consumer protection aspect,” he said.

“We currently solve that problem via exclusion and saying investors need to decide if they will play in a certain casino that has nothing to do with the regulated system, where no German or European supervisor or regulator will help,”  Branson said. “The question is, how sustainable is that strategy?”

He also cautioned that the crypto industry needs to be regulated on a global level.

“A lot of what we have seen recently has happened far away from us, if you can figure out where it is,” Branson said. “You really have to let this sink in: no one knows where certain large platforms are.”

His comments came days after a warning from European Central Bank supervisory board chair Andrea Enria that regulating crypto asset providers will not be easy.

“I am concerned for my colleagues that will have to perform this supervision in the future because these are animals with whom it is difficult to engage,” Enria said.

The European Union is engaged in finalizing crypto regulation legislation, known as Markets in Crypto Assets, which will replace the current hodgepodge of national rules dealing with crypto trading and platform management.

“[It’s an] interesting challenge,” he said of the proposed legislation. “When you’re talking about risk management with [regulators], they have a different mindset. They think of IT security only; they never think about financial risks, so I don’t know how our toolbox will work with these types of animals.”

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