President of the German financial regulator BaFin said that they will prioritize systemic risks with crypto regulation, not individual investors
Felix Hufeld, President of the Federal Financial Supervisory Authority in Germany (BaFin), said the primary role of his regulatory authority is not individual investor protection, but the preservation of overall financial stability, Cointelegraph auf Deutsch reported today, June 12.
While the role of BaFin is to protect consumers and maintain general financial market stability, Hufeld stated that it can only address systemic risks, and cannot protect every investor from “his fate.” Hufeld explained:
"That's why we warned ICOs last November, pointing out the high price volatility of crypto-tokens. We will not be able to protect every single investor from his fate, and that cannot be the task of state supervision. Once again, the maxim is that we must act prudently or regularly if financial stability as a whole is threatened or if consumers are systematically harmed."
While Hufeld characterized blockchain technology as disruptive, he added that its true potential remains to be seen sometime in the future. He recalled the famous misjudgment of the then Microsoft CEO Bill Gates in 1991, in which Gates described the Internet as overrated hype, only to recognize the boundless opportunities a few years later.
Hufeld did not conclusively answer the question of whether Bitcoin and blockchain are only a subject of hype, or a force that could significantly change financial markets. Overall, Hufled drew a relatively positive picture of blockchain technology:
"The disruptive potential of this technology, however, goes beyond saving costs. Completely new business models could emerge that neither you nor I think of today. And every day, many people are working to find further uses for the blockchain and to use the technology over a large area”.
Hufeld remains skeptical of cryptocurrencies, saying that their potential use in enabling money laundering and terrorist financing is a “worst case”. He added that BaFin should cooperate and collaborate with other regulators worldwide and strive for "global standards and internationally agreed supervisory standards".
In April, Hufeld called for cautious regulations on cryptocurrencies in the opening speech of the BaFin-Tech 2018 conference. He said that blockchain regulation must limit risks without diminishing the opportunities it brings.