Germany’s top financial regulator today warned of the dangers posed by offshore brokers that continue to chase Online Trading business, including within the gray area of the country’s cryptocurrency sector.
BaFin has specifically marked another firm with the red flag. The independent regulator highlighted that a company called AlpenFX Ltd is running an illegal business while having not acquired proper authorization. The firm offers German customers CFDs that allegedly give them exposure to FX and cryptocurrency instruments.
“The operator of the platform is thus conducting proprietary trading dealing on own account within the meaning of section 1 (1a) sentence 2 no. 4 (c) of the KWG on a commercial basis. Neither the Trading Platform nor its operator hold the authorisation required under section 32 (1) of the KWG and are therefore conducting unauthorised business,” the watchdog further explains.
According to BaFin’s intel, the regulator suspects AlpenFX to be a suspicious company as they use contract documents marked with a German Office at Hanau Freigerichtstraβe 23. This gives the impression that it is legitimized in Germany, which has never been true.
According to the watchdog, AlpenFX claims to be located in Germany with offices in London and Cyprus, which seems false. Either way, the financial regulator urged its citizens to be careful and follow due verification processes, check the company’s identity (identity details, country of establishment, etc.), and never trust a company if it cannot be clearly identified.
BaFin Turns Eye to Crypto
To prevent such practices, BaFin issued several guidelines that encourage potential investors to be wary of promises of disproportionate returns.
In an attempt to keep up with the rise of the crypto market, including the number of trading platforms and users, BaFin has been adamant in its warnings toward investors, elaborating on the potential risks associated with the booming industry.
Crypto firms operating in Germany have had to apply for a license to the nation’s financial watchdog, BaFin since the end of 2019 when the new Anti-Money Laundering (AML) regulations came into effect. Although derivatives referencing crypto assets would not fall under this suggestion, they remain subject to ESMA’s current restrictions and any future proposals by BaFin regarding the sale of these instruments to retail investors.
