The Federal Financial Supervisory Authority has reportedly sought for changes to be made to one of the top cryptocurrency exchanges. Germany’s financial regulator has ordered Coinbase to tackle its potential deficiencies.
The cryptocurrency exchange platform, Coinbase, is one of the most well-known crypto investment organizations today. But it seems as though Germany has been made aware of potential risks in the infrastructure. Subsequently, the country regulators have ordered Coinbase to address them.
Coinbase Germany Faces Regulation Concerns from BaFin
Germany’s financial regulators reportedly uncovered what was referred to as “organizational deficiencies” on Coinbase. Detected through an audit of the financial statements, the findings were reported in a statement published on Tuesday.
The Federal Financial Supervisory Authority, known as BaFin, stated that Coinbase Germany was violating the German Banking Act. Specifically, the regulator noted, “risk-bearing capacity, adequate staffing, and emergency management” as violative practices.
The report also stated that there was incomprehension in certain regulatory formalities. As BaFin noted the cryptocurrency exchange needed, “appropriate arrangements that allow the institution’s financial position to be determined at all times with reasonable accuracy.”
Regulations on various cryptocurrency exchanges around the world have been a growing story over the last year. Moreover, as cryptocurrency makes its way into the mainstream marketplace, the way it is regulated will continue to evolve.
Although this report raises some concerns, BaFin did grant Coinbase Germany permission to provide cryptocurrency services to the country in 2021. Yet, the concern over risk management and other regulatory facets recognized by BaFin should be addressed for the coming year.
In a statement to CoinDesk, Coinbase responded by noting they are “cooperating fully” with the BaFin findings. “We have developed a remediation plan fully addressing each finding of the audit report to address BaFin’s concerns. To date, we have made substantial progress on this plan,” the firm noted in the statement.