Germany’s financial regulator sees no need for a ban on digital currency offerings, or ICOs, despite issuing a stern warning about the dangers of potential fraud from these new financial instruments.
BaFin, the federal agency that splits its supervisory duties with the Bundesbank, has come under fire for being tight-lipped on ICOs even as supervisory bodies in other countries took action. In an interview with Handelsblatt, BaFin official Christoph Kreiterling defended the agency’s reticence, saying it was simply observing developments before issuing its warning. “A clear warning requires a clear examination of the phenomenon and its risks,” said Mr. Kreiterling, who runs BaFin’s new department of Innovations in Financial Technology.
In the past, Bafin had occasionally banned the use of individual financial products or restricted their circulation. Last Thursday’s announcement was unusual as it applies to an entire class of potential assets. In its warning, BaFin said information brochures on ICOs were often insufficient or even misleading, and that these tokens were liable to fraud, money laundering and terrorism financing.