The public has lost confidence in the crypto space. The collapse of the crypto exchange FTX deals another blow to the market for Bitcoin and Co. In the industry, there is talk of crypto winter and crypto contagion. Bafin boss Mark Branson would prefer to “extend regulation to all areas”. However, he does not want to “kill” the business.
Bafin President Mark Branson wants to use the crypto winter to tighten market regulation. “It is time to tackle serious regulation,” the head of Germany’s financial regulator told reporters this week. He said this includes extending principle “to all areas,” including the deposit and lending business of crypto platforms. On crypto business, he said, “I don’t want to kill it, but I don’t like the risks.”
The market for crypto assets has plummeted in recent months in the wake of rising interest rates and several fraud cases. Rising interest rates have made crypto assets less attractive, which usually have no returns and have made credit-financed investments more difficult. Bitcoin, the best-known crypto asset, has lost about 60 per cent of its value in euro terms this year.
“After the crypto winter, there may be a spring again,” Branson said. However, he added, it still needs to arrive. “We’re not through yet. Some have collapsed, others are yet to do so.” Still true, he said, is that investing in crypto assets can lead to a total loss. “I’ve always said that; unfortunately, it’s become a reality.”
Should the crypto market grow again, the Bafin president expects “very likely much more interconnectedness with the traditional financial system.” He said regulation would have to adapt to this, and the crypto market should be treated the same way as the traditional financial system, according to the principle of “same risk, same rules.” Specifically, he said, the three areas are financial stability, consumer protection and money laundering. Especially about money laundering, there is a lot wrong with the crypto sector, he said. “Bitcoin is the most popular means of payment for organized crime,” Branson emphasized.