The Federal Financial Supervisory Authority (Bafin), Germany’s financial regulator, has ordered the immediate cessation of Finatex’s signature cross-border trading on German soil. The regulatory authority published the news on its official website on November 10 citing a formal notice issued to the UK-based company on October 2 to terminate the service with immediate effect.
Not licensed for cross-border trading
According to the announcement, Finatex through its cryptocurrency trading arm was “conducting proprietary trading within the meaning of section 1 (1a) sentence 2 no. 4 (c) of the German Banking Act (Kreditwesengesetz – KWG) as a service for others in the Federal Republic of Germany without the authorization required under section 32 (1) of the KWG.”
The notice further states that Finatex carried out operations involving options, CFDs on shares, indices, currencies and commodities like any other licensed digital assets exchange platform but without approval by German authorities.
Hard on ICOs
Bafin is known for its harsh stance on ICOs. In 2017 the company issued warnings to German investors to keep off ICO investment. In the publication, the regulating authority asserted that investors would bear the risks of any losses arising from ICOs dealings as the sector is not yet subject to any financial policies in the country. The warning further stated that investing in ICOs was a risky practice and consumers should steer clear of such trading.
The independent financial watchdog once contemplated subjecting ICOs to the same regulations as the nation’s official legal tender to make them safer for investing. The problem with this approach however, is the difference in the way the two operate which would necessitate that a different framework be formulated for ICOs.
Bafin, which got its authority to regulate cryptos and ICOs from a court ruling in Berlin which determined that Bitcoin and other related cryptocurrencies are ‘Financial instruments’, has been under intense pressure to tame the widely unregulated sector. Other nations like France are enacting legislation to govern the sector. The future of cryptocurrency in Germany depends on how the financial watchdog will choose to frame its policies. Either way, friendly policies are better than outright condemnation.