German Banks' Crypto Interest Is Limited as Industry Is Plagued by ‘Crooks,’ Regulator Says
German banks have seen limited interest in handling crypto, the President of Germany’s financial regulator Bafin, said in an interview published Thursday, adding that financial innovation attracted “freeloaders and crooks.”
German is one of the first countries to require banks to hold a license to deal in crypto, but Mark Branson, who also sits on the board of the supervision arm at the European Central Bank (ECB), said it has only issued four licenses for crypto custody and 14 provisional permits.
“Overall, banks’ interest in offering crypto-asset trading to their customers still seems, to me, to be limited,” Branson said in an interview posted on the ECB website, saying that blockchain technology needs to move from being merely “promising” to being “effective and scaleable.”
“Not all crypto business models are serious,” he added. “Waves of innovation, as we know, also bring with them freeloaders and crooks.”
Rather than slowing innovation, regulation should be well balanced and flexible to allow sophisticated projects to emerge and reduce financial stability risks, he said.
But the regulator is also prepared to get tough. BaFin recently ordered crypto exchange Coinbase to remedy organizational shortcomings revealed during an audit, and crypto companies there will soon be subject to the European Union’s Markets in Crypto Assets Regulation (MiCA). International standard-setters have also proposed tough caps on banks' bitcoin holdings.