The Federal Financial Supervisory Authority of Germany, also known as BaFin, has issued an order regarding the business organization of the local branch of Coinbase in accordance with the country’s banking laws.
In a Nov. 8 notice, BaFin said it issued the order to Coinbase Germany GmbH for violating “proper business organization” under German banking law. According to a copy of the legislation made available by the United States Commodity Futures Trading Commission, the German branch of Coinbase should have “appropriate arrangements to manage, monitor and control risks and appropriate arrangements by which the financial condition of the institution can be assessed with sufficient accuracy at any time” and provide audit certificates relating to the appropriate reports on its annual accounts.
BaFin called the German branch of Coinbase outsourcing some of its operations as “essential to conduct banking business or provide financial services.” The order has been in effect since October 27.
“An audit of the annual financial statements revealed organizational shortcomings at the institute,” BaFin said. “The regularity of the organization of the company was not given in all the areas audited.”
In a written statement to Cointelegraph, a spokesperson for Coinbase said the exchange is “fully cooperating” with its efforts to respond to the findings of the annual audit report:
“Coinbase views regulation as a business enabler and the process to undertake the actions identified by BaFin has already begun. We have developed a remediation plan that fully addresses each finding in the audit report to address BaFin’s concerns. To date, we have made substantial progress on this front.
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Germany’s financial watchdog first issued local branch Coinbase a license allowing the exchange to hold digital assets in the country in July 2021. The move followed German lawmakers passing a legislation requiring companies aiming to provide crypto services to receive BaFin approval from January 2020.