German Finance Minister Olaf Scholz has announced plans to restructure financial services regulator Bafin following the reputational damage surrounding the Wirecard scandal.
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An European fintech success story, Wirecard rose to prominence as a global payments processor for both fiat and crypto payments, surprisingly entered DAX, Germany’s premier stock market index.
Following Bafin reputational damage surrounding the payments processor Wirecard, Scholz told the Frankfurter Allgemeine Sonntagszeitung newspaper,
“It was now the task of legislators to review and improve the protective mechanisms.”
Going further Scholz explained, “Bafin must be given a direct right of intervention and the current two-stage examination procedure must be abolished. Bafin needed to be able to conduct special audits on a large scale at any time.”
In addition, he wants to give the regulator “more rights of intervention in the control of balance sheets, regardless of whether the group has a banking division or not.”
Large payment service providers should generally be subject to financial supervision, and the institution could also be strengthened in terms of personnel, he said.
Other concerned lawmakers across the board had also called for a reform of Bafin, which is under the supervision of the Finance Ministry.
The Wirecard case has not only caused reputational damage on actors far beyond those immediately involved, it has also significantly affected adoption for crypto card payment companies like Crypto.com, TenX, Wirex and Cryptopay, among others
The Wall Street Journal’s Patricia Kowsmann is of the opinion that the scandal “has proven an embarrassment for BaFin, Germany’s markets’ regulator.”
Payment service provider Wirecard, has been on the Dax for almost two years.
The company admitted that 1.9 billion euros (2.1 billion dollars) that the company had booked to trustee accounts were possibly false and not on the balance sheet that was reportedly manipulated.
Recently, the company filed for bankruptcy which led the on-going investigation of the former chief executive Markus Braun.
The success story of the debit card issuer, all of a sudden goes into shambles.