German financial regulator updates warning on crypto assets

Germany’s financial regulator BaFin has warned retail investors about further crypto investments.

BaFin has made amendments to its previous warning in February claiming that investments in crypto assets are a risky move.

The warning now states that crypto assets “do not fall under the protection of deposit insurance and, as a rule, the protection of investor compensation does not apply either.”

In Germany, claiming your money back from a failed crypto project depends solely on the specific details affiliated with the service.

BaFin added: “The position of the customer is governed by insolvency law and therefore depends on whether there is a right of segregation after the design and implementation of the contractual relationship between the custodian and the customer.”

Currently, regulation is a conversation rife in the industry alongside the collapse and liquidation of companies over the recent market downturn.

Ex-investors and customers have fought tooth and nail for returned funds following bankruptcy cases like the collapse of Three Arrows Capital (3AC) and Celsius.

Taking the current economic situation into consideration, the updated statement from BaFin said there will still be “no protection covering customer losses, such as deposit guarantee schemes or investor compensation schemes” if trading platforms or companies go bust, adding that “such systems do not exist for crypto assets”.

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Source

Updated: 08/23/2022 — 16:00