BaFin Issues Warnings to Unauthorised Crypto-Asset Service Providers in Germany

The Crypto Markets Supervision Act (KMAG) has taken effect in Germany, and with it, the Federal Financial Supervisory Authority (BaFin) has begun to issue warnings to unauthorised crypto-asset service providers. Between September 28 and October 1, BaFin published nine consumer notices, five of which explicitly cited the KMAG. The law, which came into force on December 27, 2024, is Germany's implementation of the European regulation on markets in crypto-assets (MiCA). The KMAG governs who enforces the regulation in Germany and provides the tools for BaFin to do so.

The KMAG's Section 10(7) allows BaFin to publicly name companies that are providing unauthorised crypto-asset services. A warning from BaFin is the result of an administrative procedure, and the company in question is given a hearing before the decision is made. BaFin has identified five cases where companies have been offering crypto-asset services without a licence, and in one case, the company was found to be engaging in identity misuse.

The KMAG's implementation has caused some confusion, as the notices from BaFin list both banking and financial services, as well as crypto-asset services. However, the supervisor is still sorting out the details of the law, which is less than two years old. The case of identity misuse highlights the importance of verifying the legitimacy of a company before doing business with them.