German financial watchdog BaFin is showing intention of increasing regulation of cryptocurrencies and ICOs in the country as Bitcoin trading volumes increase with time. But the organization is currently struggling to implementing the right regulations because of recent court decisions and lack of consensus on the matter among regional regulators.
While the government has so far refrained from over-regulating the space, resulting in unprecedented growth, several challenges remain for the authorities. Recently, a mining project in Germany Envion failed to deliver after raising EUR 100 million from investors in an ICO. Now because of the lack of regulation, investors are left with almost nothing and there is no responsibility on the coin project to deliver after raising money.
According to Felix Hufeld, the head of the BaFin, new regulations are essential for the industry. But he also said, “We don’t want to stifle innovation, but at the same time we have to defend ourselves against risks.”
While BaFin did spring into action and try to impose new regulation, a Berlin court jumped in and ruled that cryptocurrencies may not be seen as accounting units and canceled the initial outlines of the regulator. Hufeld was visibly helpless after this move and said: “Investors now have only minimal rights. I can only advise private investors to steer well clear.”
German cryptocurrency companies and community are also demanding clear guidelines for the sector. As a result, newly installed Bitcoin ATMs are not operational and several companies are facing difficulties.
The European Union itself is in a fix regarding regulations for the industry. Pro-crypto nations are lobbying for loose regulations while others want stricter safeguards to protect the investors.
Other nations like Japan, South Korea and the US are in a similar fix regarding the situation. Some have enacted regulations but still await further feedback and corrections.
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