Coinbase crypto exchange has found itself in a soup with the German financial authorities for allegedly violating the rules that classify the company as a ‘proper business organisation’ there. The Federal Financial Supervisory Authority of Germany (BaFIN) has issued an order asking Coinbase to provide details on the business practices of its local arm. The German financial watchdog intends to verify if Coinbase is operating in accordance with the country’s banking laws.
The German arm of Coinbase is required to have arrangements for managing, monitoring and controlling risks to ensure that its financial situation can always be computed with sufficient accuracy.
“An audit of the annual financial statements revealed organizational deficiencies at the institute. The regularity of the business organization was not given in all audited areas,” BaFIN said in a statement.
As per the German regulations, its local Coinbase arm must be able to provide audit certificates to report on its annual accounts.
BaFin has raised an issue against Coinbase Germany arm outsour parts of its operations as’essential’ for banking business.
A Coinbase spokesperson has revealed that the company has curated a remediation plan, addressing each finding of the audit report to address BaFin’s concerns.
“Coinbase considers regulating a business enabler and the process to undertake the measures identified by BaFin has already begun. To date, we have made substantial progress on this plan,” Cointelegraph quoted the Coinbase spokesperson as saying.
This year, Germany’s crypto trading platform Trade Republic has emerged as the biggest crypto investor that poured $1.1 billion (roughly Rs. 8,800 crore) into the crypto sector, a KPMG report had recently claimed.
Research firm Triple-A estimated that nearly five million people hold crypto assets in Germany.
Coinbase, that aims to be the most licensed crypto firm in the world, received its approvals in Germany back in July 2021.