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The statement published by Germany’s Federal Financial Supervisory Authority (BaFin) on 26 August 2026 that “a BaFin licence is seen in the market as a seal of quality” deserves closer scrutiny: „Eine Bafin-Lizenz ist ein Gütesiegel“. The statement “Eine Bafin-Lizenz wird im Markt als Gütesiegel gesehen” appears in a BaFin interview on the European Markets in Crypto-Assets Regulation (MiCAR), in which BaFin expert Ruth Burkert explains the importance of licensing and supervision for crypto-asset service providers. The statement may have been intended to describe market perception rather than to establish a legal principle. Nevertheless, it raises an important question for investors: what does a BaFin licence actually tell them about the quality and risk of a crypto investment?
The answer is considerably more nuanced than the expression “seal of quality” might suggest. A regulatory licence is first and foremost an authorisation to conduct a regulated activity subject to defined legal requirements. It is not, in itself, an official recommendation of the provider, a certification of its business model, or a guarantee of the economic quality, safety or profitability of any investment offered through that provider. This distinction is particularly important in the crypto sector, where the regulatory status of the intermediary and the risk characteristics of the underlying crypto-asset are two entirely different questions.
MiCAR represents a major step forward in this respect. Regulation (EU) 2023/1114 establishes a harmonised European regulatory framework for certain crypto-assets and crypto-asset services. It introduces authorisation requirements, organisational and governance requirements and conduct-of-business rules for crypto-asset service providers. It also requires providers to communicate with clients in a fair, clear and non-misleading manner, including in marketing communications.
These rules are highly relevant to the question of how a licence may be presented in advertising. A provider should be able to state accurately that it is authorised and supervised by the competent authority. But there is a substantial legal difference between communicating a regulatory fact and converting that fact into a quality claim.
“Authorised by BaFin” is a statement about regulatory status. “BaFin-certified” or “BaFin-approved investment” can convey a substantially different message. And “BaFin licence – your guarantee of quality and security” would go even further by attributing to the authority a substantive assessment that it has not necessarily made.
This distinction is not merely semantic. German unfair-competition law contains particularly relevant provisions. Section 5 of the German Act Against Unfair Competition (UWG) prohibits misleading commercial practices, including misleading statements concerning characteristics and the status of an entrepreneur and, in particular, statements concerning an authorisation.
Even more striking is the Annex to Section 3(3) UWG. Commercial practices directed at consumers are always unlawful in the cases listed there. No. 2 covers the unauthorised use of quality marks, seals of quality or similar designations. No. 4 addresses false claims that an entrepreneur, a commercial practice, or goods or services have been confirmed, approved or authorised by a public or private body.
These provisions do not mean that every reference to BaFin in advertising is automatically unlawful. That would go too far. The crucial question is what the reference communicates to the average consumer. A factual reference to an existing authorisation is fundamentally different from presenting the authorisation as evidence that the provider, its products or its investments have received a positive governmental quality assessment.
There is also a specific supervisory dimension. Section 23 of the German Banking Act (KWG) empowers BaFin to prohibit certain forms of advertising by institutions in order to address deficiencies in advertising. The provision therefore confirms that advertising by regulated financial institutions is not outside the scope of supervisory scrutiny simply because the institution itself is licensed.
The legal position becomes even more significant under MiCAR itself. Crypto-asset service providers are expressly required to provide information that is fair, clear and not misleading, including in marketing communications. The Regulation also contains mechanisms allowing competent authorities to intervene where crypto-asset offers or admissions to trading do not comply with the applicable requirements, including where white papers or marketing communications are not fair, clear or are misleading.
This regulatory framework makes it difficult to reconcile the concept of a “BaFin seal of quality” with the actual function of supervision, quote: „Eine Bafin-Lizenz ist ein Gütesiegel“. Supervision is designed to ensure compliance with legal requirements. It does not transform every regulated provider into a low-risk investment opportunity, nor does it eliminate the possibility of losses.
The distinction is particularly important because consumers may unconsciously transfer the regulator’s reputation from the provider to the investment itself. The psychological chain is simple: “The company is licensed by BaFin; therefore the company must be trustworthy; therefore the investment offered by the company must have been checked; therefore the investment must be relatively safe.” The first proposition may be correct. The subsequent conclusions do not necessarily follow.
This is precisely where investor protection should go further. A consumer should not stop the analysis after checking whether a crypto-asset service provider is authorised. The consumer also needs to understand what is actually being purchased, what risks are associated with the particular crypto-asset, who stands behind the project, what the liquidity and market risks are, what technological and operational risks exist, how custody is structured, and what could happen in the event of a failure of the provider or the underlying project.
One potentially important aspect is the question of independent crypto ratings. From an investor-protection perspective, there is a strong argument that investments in crypto-assets should be accompanied by an understandable and independent assessment of the relevant risks, for example through a crypto rating or, where the investment structure justifies it, a crypto-fund rating. Such a rating could address dimensions that a regulatory licence does not address: market risk, liquidity risk, concentration risk, technological risk, governance risk, issuer or project risk and the potential for a total loss.
However, an important legal qualification is necessary. Under the law currently applicable, there is no general rule in MiCAR stating that every investment in a cryptocurrency must legally have a crypto rating or crypto-fund rating before it can be offered to consumers. It would therefore be inaccurate to present such a rating as an existing universal statutory prerequisite. Rather, the argument for mandatory or standardised ratings is a policy and investor-protection argument: if the regulatory status of the intermediary is increasingly perceived as a quality signal, consumers need an equally visible mechanism that addresses the risk of the actual investment.
Nor should a private rating itself be confused with a governmental approval. A rating is an analytical assessment based on a methodology; it is not a substitute for regulatory supervision. Its value would depend heavily on the independence, transparency and quality of the rating methodology. A poorly designed rating could itself create a new form of false reassurance.
MiCAR already recognises the importance of suitability and risk assessment in certain circumstances. Where crypto-asset services such as investment advice or portfolio management are provided, the relevant rules require consideration of the client’s knowledge and experience, investment objectives, risk tolerance and ability to bear losses. MiCAR also provides that where the necessary client information is unavailable or the crypto-asset service is clearly unsuitable, the provider should not recommend the service or commence portfolio management.
This reinforces the fundamental point: regulation operates on several different levels. The authorisation of the service provider concerns the provider and its regulated activity. The disclosure and white-paper regime concerns the crypto-asset and the information made available to potential holders. Suitability requirements concern the relationship between a particular investment and a particular client. A rating, where available, would constitute yet another analytical layer. These levels should not be conflated.
The current BaFin statement therefore deserves a critical reading. Saying that a BaFin licence is “seen in the market as a seal of quality” may accurately describe a perception. But from a consumer-protection perspective, the formulation is potentially dangerous if it is subsequently used by market participants as a justification for advertising the licence itself as a quality mark. The legal framework does not support the assumption that regulatory authorisation amounts to a governmental endorsement of the economic quality of every investment offered by the authorised entity.
The distinction should therefore be made much more explicit in public communication. A BaFin licence should be presented as evidence of regulatory status, not as evidence that a particular crypto-asset is safe, suitable or profitable. A consumer should be encouraged to ask a second question immediately after “Is the provider authorised?”: “What independent information do I have about the risk of the investment itself?”
This is where the discussion about crypto ratings becomes particularly important. If the market increasingly treats regulatory authorisation as a seal of quality, investor protection should ensure that the actual investment risk is not hidden behind that regulatory halo. Whether this should ultimately lead to a mandatory crypto-rating or crypto-fund-rating regime is a question for the legislator and regulators. Under the current law, however, such a universal rating requirement does not exist.
The central message should therefore be straightforward: a BaFin licence can be an important indicator that a provider operates within a regulatory framework. It is not, by itself, a quality seal for a crypto investment. Regulation can improve transparency, governance and investor protection; it cannot eliminate market risk, technological risk or the possibility of a total loss. Treating the licence as a substitute for an independent assessment of the investment would therefore risk creating precisely the false sense of security that financial regulation is intended to prevent.
^^^ RATING EVIDENCE GmbH 
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