Bafin boss Mark Branson is calling for global regulation of the industry following the recent cryptocurrency scandals. “We have seen a self-regulated world. That will not work,” said the head of the Federal Financial Supervisory Authority Bafin on Tuesday evening at the International Club of Frankfurt Business Journalists. The international crypto market emanated from three risks that required a set of rules: it is about securing financial stability, fighting money laundering and protecting consumers.
The collapse of the crypto exchange FTX had recently shaken many investors. It was announced on Tuesday that US authorities have filed lawsuits against the founder and former CEO of the now bankrupt crypto exchange, Sam Bankman-Fried. FTX and its affiliates filed for bankruptcy on November 11 after customers withdrew funds en masse in response to the covert movement of deposits. In the European Union, the EU Parliament and the EU countries agreed on a set of rules for cryptocurrencies entitled “Markets in Crypto Assets” (MiCA) at the beginning of July. The EU wants to be the first major economic region to oversee cyber currencies.
Branson also worries about bank liquidity. The situation at Credit Suisse in Switzerland has shown once again how quickly banks can lose part of their short-term deposits when customers withdraw large amounts of money in a crisis of confidence. “We see again and again that liquidity can disappear very quickly,” Branson said. The large credit institutions in particular should take the issue very seriously, even if there have been stricter requirements since the financial crisis as to how much short-term funds a financial institution must hold. Credit Suisse, which Branson knows from his time as head of the Swiss financial regulator Finma, was recently caught up in a downward spiral after its own bad speculations. A single speculative tweet from a journalist in Australia was enough to send the stock sharply into the red. As a result, many large customers in asset management had withdrawn their money. A capital increase using state money from Saudi Arabia and Qatar was necessary.