The German regulator requires Coinbase to improve risk management – Bits Media

In the Federal Department of Financial Supervision of Germany (BaFin) consider, that the German division of Coinbase lacks effective internal control.

Bafin came to this conclusion after an audit of the financial reporting of the exchange, who showed, that Coinbase Germany has violated standard, established by the Law on Banking activities of Germany. Violation affected section 25a (1), requiring the company to maintain the ability to withstand risks, have enough personnel, IT systems and transparent mechanisms of employees' remuneration for enterprise management in emergency situations.

Requirements include the creation of "mechanisms, allowing to determine the financial condition of the company at any time with sufficient accuracy ". The supervisory authority revealed, that Coinbase lacks “proper and effective risk management” when delegating their services to intermediaries. Therefore, Bafin requires, For Coinbase to develop and lead the "Outsourcing Register".

In turn, the team Coinbase Germany assured, which is closely cooperating with the regulator to eliminate the inconsistencies identified by the audit:

“To eliminate all problems, identified Bafin, We have developed a plan for correcting errors for each audit report. Today we have achieved significant progress in this direction ".

In June, Bafin issued a license for the provision of cryptocurrency castodial services in the Federal Republic of Germany to the American Exchange of Coinbase. In the spring, the regulator issued an official warning about the “suspicion of violation” of the Binance exchange of German laws on the regulation of securities.