The Federal Financial Supervisory Authority of Germany, also known as BaFin, has issued an order related to the business organization of Coinbase’s local arm in accordance with the country’s banking laws.
In a Nov. 8 notice, BaFin said it had issued the order to Coinbase Germany GmbH for violations of “proper business organization” under the German Banking Act. According to a copy of the legislation made available by the United States Commodity Futures Trading Commission, Coinbase’s Germany arm should have “suitable arrangements for managing, monitoring and controlling risks and appropriate arrangements by means of which the institution’s financial situation can be gauged with sufficient accuracy at all times” and provide certificates of audit related to appropriate reports on its annual accounts.
BaFin referred to Coinbase’s Germany arm outsourcing some of its operations as “essential for conducting banking business or providing financial services.” The order has been in effect since Oct. 27.
“An audit of the annual financial statements revealed organizational deficiencies at the institute,” said BaFin. “The regularity of the business organization was not given in all audited areas.”
In a written statement to Cointelegraph, a Coinbase spokesperson said the exchange was “cooperating fully” in its efforts to address the findings of the annual audit report:
“Coinbase considers regulation a business enabler and the process to undertake the measures identified by BaFin has already begun. We have developed a remediation plan fully addressing each finding of the audit report to address BaFin’s concerns. To date, we have made substantial progress on this plan.”
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Germany’s financial watchdog first issued Coinbase’s local arm a license allowing the exchange to custody digital assets in the country in July 2021. The move followed German lawmakers passing legislation requiring firms aiming to provide crypto services to receive BaFin approval starting in January 2020.