Crypto regulation needs to be global, says BaFin head

Bloomberg

Crypto assets need to be subject to global rules if they’re adopted by mainstream finance and expose banks and a wider swathe of investors to risk, Germany’s top regulator said.
The recent crash in digital assets was well-timed given the ties between traditional finance and crypto are still limited, meaning it doesnt pose a risk to financial stability, BaFin President Mark Branson said at an event in Frankfurt.
Branson, responding to questions about the fallout from FTX Group, didn’t identify any crypto firms by name and indicated his
comments were on the industry more broadly.
The fall of Bahamas-based FTX, until recently widely perceived as among the most dependable names in the sector, has sparked fresh concerns over the loosely-regulated nature of crypto companies and what guardrails are in place to safely oversee clients’ assets.
FTX is the latest in a long list of large crypto businesses to come undone this year, including hedge fund Three Arrows Capital, crypto lender Celsius Network and broker Voyager Digital.
The BaFin head further said that crypto either needs to be shut out by building a “very, very strong wall” around the traditional banking system or by regulating the industry and “then see if crypto money is in real competition with fiat money.”

Crypto is also “massively susceptible for money laundering risks and doesn’t have a handle on these,” Branson said. A set of rules for the industry would need to be tackled on a global level rather than just by Europe, he said.
“A lot of what we have seen recently has happened far away from us, if you can figure out where it is,” Branson said. “You really have to let this sink in: no one knows where certain large platforms are.”