Cryptocurrency exchange Crypto.com is reportedly withdrawing its services from Germany after facing regulatory issues with BaFin, the German Federal Financial Supervisory Authority. The issues revolve around the company’s claims that its services could be used in Germany and its referral to a German provider as a license partner in its terms and conditions.
Background and Details of the Issue
According to Finance Forward, BaFin started investigating the partnership between Crypto.com and German investment solutions provider CM-Equity after it was featured on the regulator’s website. Along the way, it was discovered that the platform did not have the necessary permit to advertise in Germany, which led to further scrutiny from the regulatory body.
Crypto.com had initially announced its plans to partner with CM-Equity to transfer its customers to the German provider, but this never materialized. The company claimed that it acted as a tied agent for CM-Equity, and informed users in its terms and conditions that they were de facto customers of CM-Equity.
The partnership was expected to officially commence in February 2022, but all references to CM-Equity have since disappeared from the Crypto.com website. Moreover, the registration of Foris DAX MT Limited, the company behind it, as a contractually bound agent with BaFin also expired in August 2022.
Current Status of Crypto.com in Germany
The Crypto.com app can still be downloaded in Germany, but it is no longer available in the German language. The company claims to have acquired all its clients in the European Economic Area, including those residing in Germany, through its authorized entities that are licensed in Malta.
The platform boasts 80 million users coming from 90 countries at present. It supports the monitoring of over 500 NFTs as well as over 15,000 cryptocurrencies. It also allows trading of some of the cryptos featured in its platform including the top 10 performers like Bitcoin (BTC), Ethereum (ETH), Tether (USDT), BNB (BNB), USD Coin (USDC), XRP (XRP), Cardano (ADA), Dogecoin (DOGE), Polygon (MATIC), and Solana (SOL).
Additionally, the exchange has a newsroom compiling the latest trends and news in the crypto scene. As of writing though, it does not have any official statements on its website about its German affairs, particularly the problem it is facing with BaFin.
Implications for Crypto.com and the German Market
Germany is one of the largest cryptocurrency markets in Europe, and the withdrawal of Crypto.com from the area is a significant setback for the exchange. The company had already established a significant user base there.
Based on data, the app has been downloaded around 1.3 million times in the country since its launch. Its regulatory problem with BaFin will surely have a negative impact on its European operations and will reflect on its reputation as a business.
Final Thoughts
The hurdles faced by Crypto.com with BaFin are a reminder of the importance of compliance with regulations and the need for cryptocurrency exchanges to operate within the legal framework of the countries they operate in. Although the company has already bailed out from Germany, it remains to be seen how it will navigate the regulatory landscapes of its other key markets globally and how its major partners overseas will respond.