A UK-based cryptocurrency firm has received the ax in Germany. Finatex Ltd. has been order to close parts of its activities by Germany’s Federal Financial Supervisory Authority (BaFin), according to an announcement on the BaFin website from last Friday.
Finatex operates a crypto trading platform, www.crypto-capitals.com, which provides contracts for difference (CFD) and options on indices, shares, commodities and currencies. BaFin asserts that the company is “facilitating customers’ access to the options and contracts offered” and is not authorized to do so in Germany. As such, it will have to cease those operations.
According to the Crypto-Capitals website, “Crypto-Capitals, is a premium cryptocurrency trading platform operator, with the sole objective of delivering a powerful and intriguing trading experience. Using many years of profound business vision and professional dedication have allowed us to conceive our advanced and dependable platform for financial investors to enjoy.”
Finatex is based out of Leeds. Its core business seems tied more to search engine optimization and social media marketing than to crypto, making the crypto platform appear a little out of place for its knowledge base.
BaFin has targeted the cryptocurrency community in the past, offering public warnings against crypto and, in particular, initial coin offerings (ICO). The financial regulator has repeated the warnings several times since last year; at one point asserting, “Due to the lack of legal requirements and transparency rules, the consumer is left on their own when it comes to verifying the identity, reputability and credit standing of the token provider and understanding and assessing the investment on offer. It can also not be guaranteed that personal data will be protected in accordance with German standards.”
This past February, the regulator introduced certain requirements for ICOs, stating that ICO operators are obligated “to check exactly whether a regulated instrument, [such as] a financial instrument… or a security, is being dealt with, in order to fulfil potential legal requirements without any gaps.”
BaFin is part of a larger global effort being led by financial regulators around the world that is working to introduce wide-sweeping policies for the cryptocurrency ecosystem. It is part of the G20, which has previously said that it would introduce new regulations by this month, before later admitting that it needed more time to develop the policies.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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The German central bank, Deutsche Bundesbank, has partnered with the operator of the Frankfurt Stock Exchange to successfully test the application of blockchain technology in securities settlement. The pilot project utilizes the Hyperledger Fabric and the Digital Asset (DA) blockchain platform.
Deutsche Bundesbank and Deutsche Börse partnered in March 2016 to create a blockchain based project called Blockbaster, which stands for blockchain based settlement technology research, which seeks to develop “a conceptual prototype” for transferring and settling securities and fiat currency.
According to the two firms, the DA-based platform was tested extensively in 30 scenarios while the Hyperledger Fabric-based prototype fulfilled all basic regulatory features required for financial transactions, including Know-Your-Customer (KYC), confidentiality of transfers (need to know principle), and participation of admitted peers only (permissioned network0).
Berthold Kracke, CEO of Clearstream Banking and head of Clearstream Global Operations at Deutsche Börse Group, explains, “The tests have shown that blockchain technology is a suitable basis for applications in the field of settlement and other financial infrastructures.”
The prototypes were developed over a two-year period and functioned as a sandbox for testing blockchain-based securities settlement. Following the trial, the central bank and Deutsche Börse Group concluded that decentralized solutions should be tailored to fit the needs of the financial market.
“During the time of the project we have encountered a further development of the basic technologies which always renders test results as outdated since the technology has already improved,” the report noted. “Providers of blockchain or DLT-based solutions improve their offers and increasingly develop specialized software to serve particular use cases. There seems to be a trend towards products highly customized for individual use cases.
Burkhard Balz, a member of the executive board, Deutsche Bundesbank, explained, “During this project, Deutsche Bundesbank and Deutsche Börse learned a lot about the usage of this technology and its concrete implementation. We expect the rapid development to continue, and also see the potential in using it for high-volume applications. The approach of a permissioned architecture, which takes into account the requirements of the financial sector from the outset, has proven to be right.”
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