The licensing of BaFin to Coinbase Germany raises questions. Did the agency prefer the US company in the approval process?
At the end of June, a message triggered waves of euphoria in the German crypto space. Coinbase Germany, the German offshoot of the largest exchange site for digital assets in the USA, achieved a historic achievement when BaFin approved the Wilmington-based company the first license to store crypto values in Germany. Since then, Coinbase Germany is the first company ever to call itself a “regulated crypto custodian” within the meaning of the German legal situation and thus offer crypto currencies for trading and custody under the supervision of BaFin.
However, the FDP parliamentary group now suspected that the German financial supervisory authority might have treated Coinbase’s application preferentially. That goes from a Small request the party presented to BTC-ECHO. Accordingly, a total of 27 applications had been received by BaFin by the time the license was granted on June 28. These were processed “basically in chronological order”. The BMF did not give the exact date of the submission of the Coinbase forms in response to a request from the FDP. The exchange submitted its application to the supervisory authority as “one of the first” crypto companies, according to the Ministry of Finance. For the FDP this results in a preference for the application, since basically the previously submitted concerns of other competitors should have been dealt with first.
Frank Schäffler, member of the Bundestag for the FDP parliamentary group, is also unimpressed by the speed of the approval process. There is even talk of distortion of competition. He said to BTC-ECHO:
The processing of the permit applications is too slow. In this way, BaFin prevents innovative companies from entering the market. Especially when some companies get permission while others wait months, there is a risk of unfair distortions of competition by the state. The federal government and the financial supervisory authority have increasingly become a location disadvantage for Germany. The crypto industry must therefore finally have the necessary priority after the election.
Frank Schäffler opposite BTC-ECHO
BMF rejects Coinbase allegations
The Federal Ministry of Finance defends itself in its reply. BaFin deviates from the chronological processing principle if the required evidence or information is not available.
However, each application for a permit can give rise to various detailed regulatory questions, which result in a different amount of testing effort.
In addition, not all of the necessary information and evidence are available when the application is submitted. Therefore, in some cases, in line with the principle of efficiency, there is a deviation from the principle of chronological application processing.BMF response to allegation of preferential treatment in the Coinbase case
In the case of Coinbase, the necessary documents were available first, so that the decision-making was made first. Further approvals are to follow in the next few weeks. However, it is not clear from the letter which companies are involved.