German Regulator, BaFin Plans Survey on Crypto-backed Derivatives; BTC and ETH

According to a report on December 17, BaFin plans to execute a market research survey, precisely on cryptocurrency-backed derivatives. It aims to focus mainly on the two popular cryptos: Bitcoin (BTC) and Ether (ETH), as opposed to security tokens.

For the initiative, the report noted that the regulator sought the views of consumer protection associations, Investors, including other interest groups. BaFin's main objective is to "assess the risks for market participants."

This is due to the rapid growth in the interest of risky crypto-backed derivatives in recent years. An example of such derivatives includes the Contract for Difference (CFD). 

BaFin Joins Trends With Other Regulators

The development today by the German financial regulator is in line with the trend of other regulatory agencies seeking to subject crypto assets greater scrutiny. A typical instance is a paper published by the Basel Committee on Banking Supervision (BCBS) on the prudential treatment of crypto-assets.

In the paper, BCBS proposed the deduction of direct exposure to crypto-assets from a bank's Common Equity Tier 1 (CET1) capital. Banks providing or acquiring services related to these assets should apply for; "conservative prudential treatment to such exposures, especially for high-risk crypto assets." 

The regulator added that banks should first update regulatory authorities on their plans to gain exposure to crypto-assets. Also, they should ensure that they've evaluated the inherent risks and taken appropriate mitigation actions before participating.

In a separate development, BaFin order Karatbit Foundation to cease and desist from operating an unauthorized business in Germany. The blockchain-based company accused to issue KaratGoldCoin (KBC), without proper approval.

Karatbit claims to have at least 500,000 acceptance points globally. Including ten other crypto exchanges that support the trade of gold products for the token.