Giant cryptocurrency exchange Coinbase received a warning from Germany’s financial watchdog, the German Federal Financial Supervisory Authority (BaFin), for its business structure. In the middle, Coinbase is currently experiencing access issues.
Dispatch warning from BaFin for Coinbase
Germany’s financial watchdog has warned cryptocurrency exchange Coinbase following an annual check that raises questions about its installation in Europe’s largest economy. Independent control firm Deloitte detected ‘organizational shortcomings’ in Coinbase’s Germany unit in a check. Subsequently, BaFin announced on Tuesday that it ordered Coinbase to provide an ‘appropriate’ business structure.
In May, Deloitte gave an unconditional view of control over Coinbase’s financials. That is, he stated that he did not detect any problem in his financial statements. However, he pointed out the company’s organizational flaws. BaFin’s warning marks the final blow for Coinbase. In this middle, Coinbase is in the middle of the biggest players in the digital asset industry on the US list. The company last week reported $545 million in losses in the third quarter, as the sharp drop in crypto prices this year slashed transaction volumes.
Coinbase has seen its shares drop almost 80% since its direct listing in April 2021. In addition, Koindeks.comAs you follow, Coinbase also announced plans to lay off nearly a fifth of its workforce, which makes up more than 1,000 people, this summer.
BaFin’s warning came after Coinbase became the first cluster to receive permission from the German financial regulator to provide crypto custody and proprietary trading services in June 2021. Coinbase’s BaFin release was part of the wider industry’s turn to Europe ahead of proposed EU-wide regulations set to coordinate the blockchain’s approach to crypto. In this middle, Coinbase and Crypto.com have registered in Italy in recent months. Despite this, strong competitor Binance has registered in France, Italy and Spain.
Regulatory control over the cryptocurrency market is growing
Regulators are toughening up their scrutiny of crypto exchanges to increase consumer defenses and ensure that places take adequate action to prevent money laundering, sanctions violations, and other criminal activity on their platforms. One bet often flagged by regulators is that crypto exchanges that collectively process more than $1 trillion a month often have complex and opaque institutional structures. For example, the largest crypto exchange Binance says it has no official headquarters.
BaFin warned investors last year that Binance was likely to violate securities rules regarding its launch of stock token trading. In response, Coinbase announced that it is proud to be the first crypto company to receive BaFin regulatory approval. He also said he was determined to meet the legal requirements under the German regime. He added that to date, he has made valuable progress in this plan. The exchange also noted that BaFin is developing plans to address each of its concerns. On the other hand, BaFin declined to provide further details.