Germany’s financial regulator has issued a cease order against a company that allows its users to buy and sell cryptos. The Federal Financial Supervisory Authority, better known as BaFin, claims that the company was offering services that it wasn’t licensed to.
BaFin has taken a more active role in the crypto industry ever since Germany enacted the amendments to the EU Money Laundering Directive, which took effect on January 1. The watchdog now has the authority to license crypto companies, with new licensing requirements taking effect as from March 31. The regulator has exercised this authority and now wants KKT UG to cease offering its services in the country.
In its announcement, the regulator stated that it had ordered the Berlin-based company, and its manager Adam Gramowski to cease operations immediately. It stated, “As managing director of KKT UG, Mr. Gramowski runs the website www.shitcoins.club and sets up vending machines throughout Germany where cryptocurrencies can be bought or sold for money. In addition, the company offers so-called “face to face” transactions with the possibility of purchasing cryptocurrencies.”
BaFin considers cryptos as financial instruments, and thus, KKT UG is conducting proprietary trading on a commercial basis without the necessary licensing. BaFin referred to the German Banking Act, better known as Kreditwesengesetz which restricts companies from engaging in such activities without the proper authorization.
Shitcoins Club operates crypto ATMs all over Europe. On its website, it states, “All of our ATMs are designed and built by our company. We are offering transactions in the following cryptocurrencies: bitcoin ethereum, litecoin and dash. You can purchase cryptos for EUR, USD, GBP, CHF in most of our ATMs. You can also use our webpage shitcoins.club to sell cryptos and pay out money at one of our ATMs using redeemable code.”
The company has reacted immediately, disabling the crypto ATM services for German residents. It stated, “Due to BaFin’s decision we are forced to close our ATMs for the time being. We will be back with our services as soon as possible.”
BaFin has been on the frontline in ensuring that crypto service providers are very aware of what’s required of them. As CoinGeek reported, the watchdog recently published guidelines for financial institutions that seek to offer crypto custody. They include having world-class security protocols to protect the crypto assets and sufficient anti-money laundering programs.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.