German financial regulatory body Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), or the Federal Financial Supervisory Authority, today published a note explaining initial coin offerings and how the authority body sees them. With this note, Germany joins a consortium of countries which have acknowledged the controversial fundraising instruments and provided some sort of clarification on the subject.
BaFin stated that it has been receiving many inquiries about its stand on ICOs and whether tokens and digital coins distributed during ICO events are considered financial instruments.
In the issued ‘Letter of Advice’, the Bafin clarified the regulatory classification of the tokens in the area of security supervision. This will be applicable to any firm or individual dealing in tokens.
The regulatory authority told parties dealing with ICOs that to fully comply with the regulatory rules, they need to check closely associated regulated instruments in the market, such as financial instrument or securities. In case of any discrepancies, they should approach the relevant department at BaFin.
Other EU members
Recently, the Swiss Financial Market Supervisory Authority (FINMA) published guidelines that set out how the institution intends to apply financial market legislation in handling inquiries from ICO organizers.
Following Switzerland’s lead, the Spanish conservative party announced that it is drafting new legislation which will favor cryptocurrency by giving tax breaks to blockchain firms.
Moreover, the British overseas territory of Gibraltar became the first jurisdiction to fully recognize blockchain firms, and ICOs are thus fully regulated in that market.
Meanwhile, BaFin recently ordered Berlin-based crypto exchange GmbH to halt trading, as the latter advertised that it would sell customer’s bitcoins for euros and sell them on a stock exchange. BaFin said that the exchange was not authorized to operate in the country.