BaFin, the agency charged with the supervision of financial activity across Germany, has called for establishing a direct and innovative DeFi regulation across Europe. The agency’s statement was reiterated by its executive, Birgit Rodolphe, who talked about the importance of having a uniform rule across the continent. BaFin is the agency tasked with regulating and safeguarding the financial market across Germany. The agency checks banks and institutions providing all sorts of products, including digital assets and insurance.
The BaFin executive bemoans illicit activities in the sector
BaFin also grants the license of operation to firms who come into Germany to provide crypto trading and custody services to residents. The executive warned of the severe effects of not having a regulated decentralized finance sector in a document that can be accessed on the agency’s official website. Rodolphe said it would do the whole continent a favor if they had a uniformly regulated DeFi market.
Rodolphe noted that time is presently not a luxury, and with every wasted time without regulation, the sector’s users are exposed to harm. Rodolphe also talked about the various criminal activities that have gone unpunished because of how the market is built. The BaFin executive says the continent needs to fight back, citing hacks and other illegal activities.
Rodolphe urges consumer protection laws
Rodolphe has also talked about the technicalities in the DeFi sector while noting the complicated issues surrounding products in the industry. The BaFin boss said that some of the products are very technical and pose many challenges to some investors. She also highlighted that once a regulation is drummed up, the protocols will have no choice but to follow them. Rodolphe has a case of taking a crypto loan and talked about how complex the process is across the DeFi market.
She also reiterated the lack of protection for consumers as they can wake up to discover their portfolios have been wiped clean without anybody to report to. She also wants to license the various financial services afforded to users in the DeFi sector. For instance, she called on regulators to issue licenses to protocols intended to offer lending services to consumers outside of the bank. She gave an example of the license that the agency introduced in January 2020 as a perfect one for the crypto sector. With the license, firms can provide crypto activities across their jurisdiction in the country. However, only four firms have been awarded, while the application of other firms is still in the works.