Germany’s financial supervisor, BaFin, has ordered the German branch of crypto exchange giant Coinbase to “ensure proper business organization,” the regulator wrote in an official statement published on Tuesday.
BaFin indicated violations of the German Banking Act, pointing at two particular sections. One section outlines requirements for sustainable development, risk strategy and protecting internal capital adequacy.
The German regulator also expects Coinbase to “ensure ongoing appropriate and effective risk management that includes the outsourced activities and processes,” following the Banking Act. The order has been in effect since Oct. 27.
"Coinbase is committed to meeting all legal requirements under this regime. We are cooperating fully as we seek to address the findings of the annual audit report," Coinbase said in a comment to The Block.
"Coinbase considers regulation a business enabler and the process to undertake the measures identified by BaFin has already begun," it added. "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."
“An audit of the annual financial statements revealed organizational deficiencies at the institute,” BaFin’s statement said. “The regularity of the business organization was not given in all audited areas.”
Coinbase first secured a crypto custody and trading license from BaFin in July 2021, to legally provide its services to German customers.
(Corrects second Quick Take to remove reference to CoinDesk.)
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