Germany Financial Watchdog Exec Calls For Crypto Regulations

Rupert Schaefer, an executive at Germany’s financial regulatory authority, emphasized the need for crypto regulations while cautioning that FTX won’t be the final crypto exchange to collapse.

“The insolvency of the crypto exchange FTX has shown how significant deficiencies in the onboard system can have an impact,” the statement declared.

Schaefer: Germany Needs Crypto Regulations To Prevent Plunges

In a recent statement, Rupert Schaefer, an executive director at the Federal Financial Supervisory Authority (BaFin), highlighted the ramifications of FTX’s collapse. He noted that it would not be the last exchange to go bankrupt.

“The insolvency of the crypto exchange FTX has shown how significant deficiencies in the onboard system can have an impact. FTX was not the first, and it won’t be the last crypto provider to crash.”

Schaefer believes that the digital asset industry will only become trusted once appropriate regulations are in place. He asserts the need for “clear and appropriate rules for crypto markets.”

Moreover, Schaefer maintains that these regulations are essential for building trust within the crypto industry.

He drew a parallel between aircraft regulations and the crypto industry. He compared the uncertainties in the crypto industry, such as the lack of regulatory clarity, to unidentified foreign objects (UFOs):

“It’s every pilot’s nightmare: Unidentified aircraft moving within their airspace without identification and without radio communication. They don’t follow any flight rules. Ordered air traffic and passenger safety are at risk.”

Europe Shows Strong Support For MiCA Bill

Schaefer emphasized that BaFin will grant approval solely to crypto firms with a sound business model and trustworthy executives at the helm:

“For us at BaFin, it is clear: Only those with a plausible business model, sufficient startup capital, and reliable leadership will receive permission from us. We take regulatory standards seriously.”

Binance has recently decided to withdraw its application from BaFin. It cited the evolving dynamics of global markets and regulatory changes anticipated with the Market in Crypto-Assets (MiCA) bill.

On May 15, the MiCA bill received widespread support from all 27 European finance ministers. The framework is particularly focused on closing the loopholes in the system that allow avoiding taxes.

Sweden’s Finance Minister, Elisabeth Svantesson, believes that it will decrease the risk of crypto assets being exploited as a safe haven for tax avoidance.

Binance intends to revisit its application once regulatory clarity improves, with the aim of strengthening its foothold in Europe.