Rupert Schaefer, an executive at Germany’s financial regulatory authority, emphasized the necessity of crypto regulations while cautioning that FTX won’t be the final crypto exchange to face collapse.
“The insolvency of the crypto exchange FTX has shown how significant deficiencies in the onboard system can have an impact,” the statement declared.
Schaefer: Germany Needs Crypto Regulations to Prevent Plunges
In a recent statement, Rupert Schaefer, an executive director at the Federal Financial Supervisory Authority (BaFin), highlighted the ramifications of FTX’s collapse. He noted that it will not be the last exchange to go bankrupt.
“The insolvency of the crypto exchange FTX has shown how significant deficiencies in the onboard system can have an impact. FTX was not the first, and it won’t be the last crypto provider to crash.”
Schaefer believes that the digital asset industry will only become trusted once appropriate regulations are in place. “That’s why we need clear and appropriate rules for crypto markets. Only then can we build trust in digital financial offerings,” he stated.
He drew a parallel between aircraft regulations and the crypto industry. He asserted that a deficiency in either sector would result in catastrophic consequences.
“It’s every pilot’s nightmare: Unidentified aircraft moving within their airspace without identification and without radio communication. They don’t follow any flight rules. Ordered air traffic and passenger safety are at risk.”
Schaefer stated that BaFin will only approve crypto firms that maintain the highest ethical standards and have a suitable business model in place.
“For us at BaFin, it is clear: Only those with a plausible business model, sufficient startup capital, and reliable leadership will receive permission from us. We take regulatory standards seriously.”
Binance has recently decided to withdraw its application from BaFin. It cited the evolving dynamics of global markets and regulatory changes anticipated with the Market in Crypto-Assets (MiCA) bill.
On May 15, the MiCA bill received wide spread support from all 27 European finance ministers, casting their vote in favor of the new laws. The framework is particularly focused on closing the loopholes in the crypto system that allow avoiding taxes.
Sweden’s Finance Minister, Elisabeth Svantesson, says, “This reduces the risk of crypto assets being used as a safe haven for tax avoidance and tax fraud.”
Binance intends to revisit its application once regulatory clarity improves, with the aim of strengthening its foothold in Europe.
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