Just two weeks after releasing guidance on how to spot scam brokers, the German Federal Financial Supervisory Authority (BaFin) has released another lengthy document attacking the ‘black market’ and blockchain’s involvement in it.
Posted on the regulator’s website on Monday, the document says that blockchain companies should ensure that they do not fall under the regulator’s purview in order to avoid any potential fines or lawsuits.
The regulator defined three areas of business that retail traders should be aware of; the ‘white market’ where businesses are regulated and compliant with laws, the ‘black market’ where businesses are operating illegally and, lastly, the ‘grey market,’ in which firms may be acting illicitly but are not regulated by BaFin.
Though BaFin did not say so, it is in this final category that much cryptocurrency business has been done. Still, the German regulator, having distinguished between the different legal zones in which firms operate, immediately moved on to discuss online trading.
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BaFin – stomped by scams
Initial coin offerings, BaFin said, “represent a special challenge” for regulatory authorities. The reason for this being that, as coins and the conditions under which they are offered are hugely disparate, there is no uniform approach that can be taken to regulating them.
Having said this, BaFin then proceeded to lay into online trading firms for the second time in two weeks. The German regulator did specify that it was talking about “unregulated internet trading platforms,” but it is still interesting to note the perfunctory style in which that label was attached to the target of its scorn.
After attacking unregulated brokers, saying that they are nothing more than scam operations designed to steal cash, BaFin ended its document by describing actions it could take against criminal firms.
The most striking thing about the various points outlined in this section is the fact that none of them would have any impact on an unregulated broker. People who work in Ukraine but say they are in the Marshall Islands are not easy to track down and, if they are found, then there is nothing the German authorities can really do about it.