The trading of cryptocurrencies grew more and more complex over the past ten years. Nowadays, investors do not only have the option to directly sell and acquire Bitcoins but instead they can also hold long or short positions of Bitcoin. These derivative transactions allow them to bet on rising or falling prices without ever acquiring cryptocurrencies directly. Margin trading with cryptocurrencies has also been possible for years now. The offered cryptocurrencies range from blockchain-based currency tokens such as Bitcoin, Litecoin or dash to countless utility tokens that can only be used as vouchers in a specific eco-system. In this more and more maturing market, information concerning exchange rates and trade volumes of crypto assets is of vital importance. Since there is no official listing for cryptocurrency exchange rates, numerus private service providers now offer this information in real-time in a consolidated, compiled and useable form to their customers. Precise and up-to-date information regarding the development of exchange rates are of crucial importance to traders of cryptocurrencies. The information service providers do therefore play an essential role on the global crypto market.


Erroneous information regarding exchange rates and trade volumes can potentially cause massive damages to investors and is suitable to disrupt and compromise the crypto market in its core functions. Adding the fact that cryptocurrencies, in contrast to securities that are traded at the traditional security markets which are regulated by MiFID 2 and MiFIR, usually lack of emitters that would be obligated to inform market participants continuously via ad-hoc-notifications, prospectus and amendment obligations about incidents that have the potential to influence exchange rates. In light of the aforementioned circumstances an approval of crypto information service providers prior to the start of their operations by a supervision authority regarding the collection and evaluation as well as the publication of their data would not be entirely absurd. Nevertheless, such an official regulation is currently not in place. Providers of crypto information services are neither subject to an initial authorization requirement nor to an ongoing supervision of their services.


The European Markets in Financial Instruments repealing Directive (MiFID 2) as well as the European Regulation on Markets in Financial Instruments (MiFIR) call for the supervision of Data Reporting Service Providers. These service providers support emitters of securities with the fulfilment of their publication and reporting obligations. Certain Data Reporting Service Providers – the so-called Consolidated Tape Providers (CTP) – provide their collected data in a consolidated form to the public. In Germany, these Data Reporting Service Providers are subject to BaFin authorization according to sec. 32 subsection 1f of the German Banking Act (KWG). However, crypto information service providers cannot qualify as Data Reporting Service Providers in that sense, because cryptocurrencies generally do not qualify as financial instruments in the sense of MiFID 2 and MiFIR. Therefore, the activities of crypto information service providers are not covered by the European financial markets regulations MiFID2 and MiFIR. In contrast to that, publications of information that concern security tokens, which are designed as blockchain-based securities and therefore constitute financial instruments in the sense of the aforementioned regulation can be data reporting services, given that the service provider is involved in the fulfillment of the emitters publication and reporting obligations and publishes the so collected data in a consolidated form. On the other hand, crypto information service providers that merely provide and publish information about exchange rates and trading volumes are not subject to any financial regulation in Europe and Germany.

Attorney Lutz Auffenberg, LL.M. (London)