BaFin claims that Coinbase Germany GmbH violated the German Banking Act.
The Federal Financial Supervisory Authority of Germany (BaFin), the financial regulatory authority for Germany, has issued an order to Coinbase’s local branch to ensure “proper business organization.”
According to the statement published on November 8th, Coinbase Germany GmbH violated the German Banking Act's Section 25a (1).
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The section claims that companies must maintain adequate staffing, risk-bearing capacity, emergency management mechanisms, and transparent employee payment systems. Moreover, it obligates companies to set up "appropriate arrangements that allow the institution's financial position to be determined at all times with reasonable accuracy."
In the order, which has been in effect since October 27th, 2022, BaFin claims that Coinbase Germany lacks “appropriate and effective risk management” and needs to create “an outsourcing register." In the statement, The Federal Financial Supervisory Authority of Germany noted:
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.
It is worth noting that in 2021, Coinbase received regulatory approval to provide crypto custody services from German authorities. Regarding the order issued by BaFin, a Coinbase Germany GmbH spokesperson noted:
We have developed a remediation plan fully addressing each finding of the audit report to address BaFin’s concerns. To date, we have made substantial progress on this plan.
In other Coinbase-related news, on November 8th, Coinbase.com, Coinbase Pro, and Coinbase Prime experienced connectivity issues due to “the high level of new user sign-ups and transfers to Coinbase.”
