The German Federal Financial Supervisory Authority, also known as BaFin, has issued an order related to the business organization of the local arm of Coinbase in accordance with the country’s banking laws.
In a notice on Nov. 8, BaFin said it had issued the order to Coinbase Germany GmbH for violations of “proper business organization” under German Banking Law. According to a copy of the legislation provided by the United States Commodity Futures Trading Commission, the Coinbase subsidiary in Germany must have “adequate provisions for the management, monitoring and control of risks, as well as appropriate provisions that allow the financial situation of the entity to be calibrated with sufficient accuracy at all times” and present certificates of audit related to adequate reports on their annual accounts.
BaFin referred to Coinbase’s German branch outsourcing some of its operations as “essential for conducting banking business or providing financial services.” The order is in effect from October 27.
“An audit of the annual financial statements revealed organizational deficiencies in the body”BaFin said. “The regularity of the business organization did not occur in all the audited areas.”
In a written statement to Cointelegraph, a Coinbase spokesperson said that the exchange was “fully cooperating” in its efforts to address the findings of the annual audit report:
“Coinbase views regulation as a business enabler and the process to undertake the measures identified by BaFin has already begun. We have developed a remediation plan that fully addresses each finding in the audit report to address BaFin’s concerns. To date, we have made substantial progress on this plan.”
Germany’s financial watchdog first issued a license for Coinbase’s local branch allowing the exchange to custody digital assets in the country in July 2021. The move followed a passage by German lawmakers of legislation requiring companies seeking to provide crypto services to receive BaFin approval from January 2020.
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