Germany’s financial watchdog Federal Financial Supervisory Authority (BaFin) released new guidance on Monday considering Bitcoin and cryptocurrencies as legal financial instruments in Germany.
“Digital representations of a value that has not been issued or guaranteed by any central bank or public body and is not necessarily linked to a currency specified by law and that does not have the legal status of a currency or money, but is accepted as a medium of exchange by natural or legal persons and can be transmitted, stored and traded electronically.”
This new classification comes after BaFin has moved to update its anti-money laundering (AML) legislation.
Concerning Cryptocurrency Custody
The development provides a mandate that permits should be obtained from crypto custodial firms. For now, unlicensed institutions in Germany that already offer crypto-custodial services will not receive penalties as long as they show intent to obtain a license before March 30th and apply before the end of November 2020.
BaFin provides a clear definition of what a crypto custodian firm constitutes in a release published on its website.
“The legal facts of the crypto custody business are fulfilled by custodians who take crypto values into care as a service for third parties. This primarily includes service providers who store their customers’ crypto values in a collective inventory without the customers themselves being aware of the cryptographic keys used.”
Additionally, already registered crypto custodians in other EU nations can not “passport” their operating license to Germany. Instead, such platforms must apply for approval to offer in-country crypto custody services.
Last month, reports revealed that BaFin received applications for crypto-custodial licensing from no less than 40 banks. Besides banks, as Boerse Stuttgart — Germany’s second-largest stock exchange recently added a new inverse Bitcoin Traded Product (ETP), the country’s stock exchange is also significantly involved with the crypto market.