By Nathan Ferguson
The executive director at BaFin (the Federal Financial Supervisory Authority) of Germany, Brigit Rodolphe, has recommended developing a uniform and innovative regulatory agenda for the DeFi (decentralized finance) across the European Union. BaFin counts to be a regulatory body based in Germany with the responsibility to regulate the banks, financial organizations (taking into account crypto firms), as well as insurance companies.
BaFin issues licenses for crypto custody, which are the certificates for the companies willing to provide crypto services throughout Germany. Rodolphe, in one of her articles on the website of BaFin, cautioned against the hazards posed to the customers of the DeFi world (which is currently unregulated) and suggested that there would be some consistent regulatory considerations throughout the countries with a membership in the EU.
She added that it is unambiguous that time is constantly passing by and with time the hazards for the customers will keep on rising. She referred to the fraudulent operations, hacks, as well as the technical problems to be the hazards encountered by the customers and due which millions have been lost up till now. She asserted that DeFi does not count to be an altruistic and democratic space as presented by its fans rather several find it difficult to understand the DeFi-related products.
She moved on to say that no liberty is enjoyed by the DeFi protocols in functioning outside of the guidelines just as they utilize the latest technologies. In her words, insurance, borrowing, lending, as well as the rest of the products excluded from the conventional system of finance are liable to abide by the supervision and licensing requirements. As per her, regulators should specify rules to provide legal clarity to the DeFi providers.
Rodolphe cited BaFin’s license for businesses of crypto custody, which was launched in 2020’s January in the form of a regulatory regime. The license allows the firms to provide Germany-wide crypto services. At the moment, just four providers have been approved in this respect, however, several financial organizations have filed applications.
Rodolphe noted that the regulatory agendas should be common in diverse countries in Europe. Germany turned into one of the prominent places of the extremely crypto-friendly country as of 2022’s initial quarter partly because of the zero-tax policy thereof over the long-term capital gains on crypto.