The German Federal financial services Supervisory authority, known as BaFin, has expressed in their perspectives on the challenges for a possible regulation around the Blockchain technology.
Blockchain, Bitcoin and regulation – a team of three, which is not together become, as before, still warm. While the U.S. stock exchange supervision authority, the SEC has at the moment, especially with the possible introduction of Bitcoin ETFs, the authorities in Germany, your thoughts. The BaFin has the on 1. August, appearing the annual report to the challenges of a possible regulation of the Blockchain technology and its manifestations expressed. Relationship status: It’s complicated.
Blockchain offers challenge and opportunities
A great opportunity, but also challenge is, therefore, mainly one of the core features of the Blockchain technology. This was Satoshi Nakamoto in his whitepaper on Bitcoin: The Absence of Intermediaries, i.e. intermediaries. BaFin writes:
“One of the core issues of sustainable management, such as trust between strangers is established, in order to enable transactions. This is made possible so far, Intermediaries such as banks and Central securities depositories, whose role, however, the transaction costs rise, and the markets are less efficient. The Blockchain technology can contribute to the necessary trust and, therefore, minimising the cost of transactions between the transaction participants, for example, by the function of Intermediaries is reduced.“
Because the question, which follows on from that: How do you regulate something that has no responsible? Another Problem, the BaFin sees is a point that is being celebrated under the Bitcoin and crypto – enthusiasts are often than advantage of their immutability. In this respect, the BaFin:
“It is still questionable how existing requirements, such as the European data protection basic regulation (DSGVO) and the “right to be Forgotten” with the currently known methods by the Blockchain technology implemented in full.”
BaFin emphasises the revolutionary Potential of the Blockchain
Nevertheless, the BaFin emphasises the revolutionary Potential of the technology that has made Bitcoin so well-known. Therefore, you have across industries great innovation power and the Potential to influence the financial industry in many ways. Ultimately, the technology will have to fight with start-up difficulties, the “should sound a note of caution”.
Finally, the BaFin in its report on a topic to speak of, just the authorities in the world. Cryptographic tokens, Payment tokens, virtual currency, value of paper tokens, Utility Token and Especially your distinction. This is done in the German bureaucrats, fashion, fine-limbed as a basis for future regulatory approaches. (The Details of which are to remain to our readers at this point saves. Anyone who wants to verify the distinguishing characteristics of itself, can do the entire report here, on pages 54 – 65.)
The result is similar to those of a study by the European Parliament. We need international Standards, a regulation at the States level does not make sense here:
“The crypto token of the market as a Whole has a high rate of innovation, and strong information asymmetries and gaps in data availability. This means for both national Supervisory authorities such as BaFin, as well as for the European Supervisory authorities and international standard-setters that they have to deal more intensively with the topic and the development must follow.“
The cooperation must take place not only between States but also between the disciplines:
“The more science, politics, and international standard-setters and regulators deal with this issue, the more legal certainty returns to the market – despite the many remaining questions.”
Overall, BaFin is certainly confident, even if for the time being, a more amount of work before:
“The price for risk-appropriate and technology-independent regulation is a relatively high initial cost at the introduction of new business models. […] Despite the undoubted difficulties posed by the clarification of regulatory issues prior to market launch of a business model has proven itself in this regulatory basic concept of the financial innovations of the past decades, in principle.“