BaFin: ICOs "Represent a Special Challenge" for Regulators

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 Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term’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 Online Trading Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products. This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.Online trading continues to see a rapid growth year on year, due to a number of reasons. Firstly, the number of brokers offering their services, with more mone Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products. This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.Online trading continues to see a rapid growth year on year, due to a number of reasons. Firstly, the number of brokers offering their services, with more mone Read this Term.

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.