German Regulator Demands Crypto Regulation
Witnessing the FTX collapse and volatility of the crypto market, German regulator Mark Branson has called for global crypto regulations.
The collapse of Bahamas-based FTX, which was widely regarded as one of the most reliable names in the industry until recently, has raised new concerns about the unregulated nature of crypto companies and what safeguards are in place to protect clients' assets.
Crypto winter has severely affected the market resulting in ongoing crypto failures. Renowned firms have been closed due to liquidity issues. FTX is the latest in significant cryptocurrency failures this year, including hedge fund Three Arrows Capital, crypto lender Celsius Network, broker Voyager Digital and Nuri bank.
Mark Branson's statement at Frankfurt
According to German regulator Mark Branson, crypto assets must be subject to global rules if they are to be adopted by mainstream finance and exposed to banks and a broader range of investors.
At a Frankfurt event on Monday, the German regulator stated that the recent crash in digital assets was well-timed because the links between traditional finance and crypto are still limited, implying that it may not pose a risk to financial stability.
When asked about the fallout from FTX Group, Branson avoided mentioning any specific companies and said his comments applied to the industry as a whole.
Continuing his statement, Branson added that consumer protection is the most disturbing aspect noted in recent months. The BaFin chief stated that cryptocurrency should either be shut out by building a "very, very strong wall" around the conventional banking system or by regulating the industry and seeing if "crypto money is in real competition with fiat money".
According to Branson, cryptocurrency is "massively susceptible to money laundering risks and doesn't have a handle on these". He stated that a set of rules for the industry would need to be addressed on a global scale rather than just in Europe.
Separately, Branson stated that despite recent issues in the cryptocurrency market, he does not anticipate a ripple effect affecting Germany's financial stability.
Author: Priya Kumari
Priya is a passionate content writer and the co-founder of Finendorse. She is an enthusiastic crypto investor and has a huge interest in the upcoming digitisation age.