Giant cryptocurrency exchange Coinbase received a warning from Germany’s financial watchdog, the German Federal Financial Supervisory Authority (BaFin), for its business structure. Meanwhile, Coinbase is currently experiencing access issues.
Organization alert for Coinbase from BaFin
Germany’s financial watchdog has warned cryptocurrency exchange Coinbase after an annual audit that raises questions about its installation in Europe’s largest economy. Independent audit firm Deloitte detected ‘organizational shortcomings’ in Coinbase’s Germany unit in an audit. BaFin then ordered Coinbase to provide an ‘appropriate’ business structure.
In May, Deloitte gave an unqualified audit opinion to Coinbase’s financials. That is, he stated that he did not detect any problem in his financial statements. However, it marked the firm’s organizational flaws. BaFin’s warning marks the final blow for Coinbase. Meanwhile, Coinbase is among the biggest players in the US-listed digital asset industry. The company posted a $545 million loss in the third quarter last week, as the sharp drop in crypto prices this year slashed trading volumes.
Coinbase has seen its shares drop almost 80% since its direct listing in April 2021. Moreover cryptocoin.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 comes after Coinbase became the first group to receive permission from the German financial regulator to provide crypto custody and proprietary trading services in June 2021. Coinbase’s BaFin clearance was part of the wider industry’s turn to Europe ahead of EU-wide envisioned regulations set to coordinate the blockchain’s approach to crypto. Meanwhile, in recent months Coinbase and Crypto.com have registered in Italy. In contrast, strong competitor Binance has registered in France, Italy and Spain.
Regulatory control over the cryptocurrency market is increasing
Regulators are sharpening their scrutiny of crypto exchanges to increase consumer protections and ensure venues take adequate action on their platforms to prevent money laundering, sanctions violations and other criminal activity. One issue often flagged by regulators is that crypto exchanges that collectively trade more than $1 trillion per 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 potentially violating 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, significant progress has been made 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 give further details.
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