German Regulators In Dilemma Over Crypto Sector Laws
The country faces the same dilemma as other global powers.
Germany’s Intent To Protect Crypto Consumers Faces Setback
The debate on regulation of cryptocurrencies has been ongoing for a while now. Some jurisdictions are known to remain ambiguous on how to run the sector. However, some countries are taking up the role by engaging different stakeholders to come up with relevant regulations. Germany is the latest country to show its intentions in regulating the sector further.
The country’s financial regulator BaFin is hinting at having more regulations in the crypto and blockchain industry as the trading volume of bitcoin keeps increasing. However, the body faces a number of challenges. BaFin is not sure about the proper regulations to implement due to factors like recent court rulings and the inability of regional regulators to reach a consensus.
To date, the government has been playing it safe by having flexible regulations that have contributed to the unexpected growth of the sector. Despite the regulation, some challenges still remain along the way. An example is the Envion project that did not deliver on its promise after raising EUR 100M from various investors. However, investors cannot get their money back because there are no laws in place to handle such cases.
BaFin boss Felix Hufeld has stated that new laws are necessary for the sector. He maintained that even as new regulations come online, the government must be keen not to kill the innovative technology but curbing risks should be given a top priority.
With the Envion case, BaFin took over with an attempt to punish the operators. However, a court based in Berlin ruled that cryptocurrencies cannot be defined as accounting units. Consequently, the jury cancelled previous guidelines issued by the regulator. According to Hufeld, they were helpless regarding the ruling stating that investors will suffer more if they don't have clear regulations to protect them.
At the moment, crypto firms based in Germany are also calling for clear laws to manage the sector. Bitcoin ATMs that have been erected in a number spots within the country have remained idle since there are no regulations. A number of countries are facing difficulties in making them operational.
On the other end, the EU is in a tight spot over crypto regulations. There are countries that are friendly to the digital currencies and they are proposing flexible laws. On the flip side, some countries are looking for stricter laws.
Comparing Europe with the US and some Asian nations like South Korea, all of them are facing a dilemma. The countries have established regulations but they are not yet sufficient.