The hands-off approach was not the right one, says the agency’s head, who insists it’s time to protect consumers as the sector expands its ties to traditional finance.
Bafin chairman is convinced that self-regulation won’t work for crypto-currencies.
The man at the helm of Germany’s Federal Financial Supervisory Authority (Bafin) has called for global regulation of the crypto-currency space. This would better protect consumers, prevent money laundering and preserve financial stability, according to Mark Branson.
A hands-off approach that “would simply let the industry develop as a playground for adults“is not the right tactic,” the executive told reporters in Frankfurt on Tuesday, shortly after U.S. authorities charged Sam Bankman-Fried, founder of failed crypto-currency exchange FTX, with fraud and other crimes.
A “spring of the crypto” can succeed to what has been a “winter of the crypto“but what emerges at the end is likely to have more ties to the traditional financial system, further increasing the need for regulation,” Mark Branson noted, according to Reuters. He was also quoted as saying:
The time has come for serious regulation of crypto-currencies.
Germany’s top financial regulator said a European solution alone would not be enough, but a global solution is needed. Regulation of crypto-currencies has so far been loose and patchy, the Bafin official added.
The European Union has been working on its new crypto asset markets (MiCA) legislation, with EU institutions and member states reaching agreement on the package in July of this year, which is expected to come into effect in 2023.
Its main objective is to establish a harmonized regulatory framework for crypto-currencies and related activities at the Union level. However, it will take at least another year to implement its provisions across the 27-member bloc, and some officials, including European Central Bank President Christine Lagarde, have already spoken of expanding its scope or even adopting “MiCA 2.”
The report notes that Mark Branson has already been skeptical of crypto-currencies. In an interview published by the Eurozone Monetary Authority in November, the German noted that “not all crypto business models are serious“, adding that “the waves of innovation, as we know, also bring with them profiteers and swindlers.“