BaFin Renews Its Concerns Over ICOs

December 19, 2018 AtoZ Markets –Just a week ago, the Federal Financial Supervision Agency of Germany (BaFin) issued a three-page guide entitled “Warning of uncontrolled investments on the Internet” for investors on how to identify fraudsters. This week it was announced that the German financial regulator has released another document dedicated to the “black market” and the blockchain.

New Document Focuses on ICO and Market Categories

The document published on Monday on the website of the German financial regulator states that the blockchain companies must ensure that they do not fall under the authority of the regulator in order to avoid any possible fines or lawsuits. In their note, the financial supervisor identified three areas of business that retail traders need to be aware of: “white market”, where firms are regulated and comply with the laws, “black market”, where companies operate illegally, and “gray market” in which firms can act illegally, but they are not regulated by the Financial Supervision Agency in Germany. Although BaFin did not mention this, according to the blockchain specialists, a lot of cryptocurrency businesses is done in the latter category. In their new document, the German regulator, explaining the differences between the various legal zones in which firms operate, immediately turned to the discussion of online trading. According to the German financial regulator, the initial coin offerings (ICO’s) constitutes a “special problem” for the financial regulator. The main reason, as the financial watchdog explains, is that there is no single approach to their regulation of this kind of digital assets as ICO’ and the conditions in which they are offered are extremely heterogeneous. BaFin, in its document, also pointed out to the unregulated online trading platforms, claiming that unregulated brokers are nothing more than fraudulent transactions designed to steal money. The regulator continued describing the potential measures that can be taken against unregulated firms. The most striking in the various points outlined in this section is the fact that none of them will affect the unregulated broker. The people who work in Russia, but they are said to be in the Gibraltar, are not easily tracked, and if they are found, the German authorities will not be able to do anything about it.

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