BaFin, Germany’s Federal Financial Supervisory Authority, has ordered Coinbase to set up Coinbase Germany GmbH over alleged violations “proper business organization.”
In the document, the government body has cited the German Banking Act in the order, which urges Coinbase’s Germany branch to have “suitable arrangements for managing, monitoring and controlling risks and appropriate arrangements by means of which the institution’s financial situation can be gauged with sufficient accuracy at all times.”
The government has also required Coinbase Germany to provide audit certificates for its annual accounts when needed. The order has also stated that the cryptocurrency exchange had outsourced several of its services, stating the latter did so as “essential for conducting banking business or providing financial services.”
The order took effect on 27 October, accusing Coinbase Germany of “organizational deficiencies at the institute.
“The regularity of the business organization was not given in all audited areas,” it added.
What Are Germany’s Rules
The news comes after BaFin issued Coinbase Germany with a licence to conduct exchanges in July last year.
According to Koinly’s assessment of Germany’s Banking Act, cryptocurrency mining is legal pending commercial operators determine whether they need a BaFin approval and licence.
Day trading is considered a commercial activity and may receive different tax breaks compared to private assets. Cryptocurrency futures in Germany have faced intense scrutiny from the European Union (EU) as they do not qualify as responsible investments. Despite this, some cryptocurrency exchanges still offer futures as products.
