Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
The German financial watchdog BaFin has issued a summary instruction manual for businesses that wish to offer cryptocurrency services that require its custody.
The German financial watchdog (BaFin) issued a new summary leaflet detailing how cryptocurrencies are treated under newly enacted laws for 2020. The instructions are presented as BaFinâs interpretation of the new German legislature.
The March 2 leaflet âspecifies the new regulatory standardsâ that businesses will need to adhere to should they wish to provide crypto custody services. This is understood as a generic term to include all businesses that hold crypto for clients, including exchanges, financial services or banks.
The new crypto regulation introduced on Jan. 1, 2020 was part of a wider initiative to align German law with the European Unionâs Fifth Anti Money Laundering Directive (5AMLD). Businesses dealing with cryptocurrencies are now considered financial services providers under Germanyâs Banking Act, and are required to obtain BaFinâs authorization.
Highlights from the paper
The instructions clarify several aspects of crypto regulation that were previously left undefined. As cryptocurrencies were not considered units of account under previous definitions, businesses dealing with crypto were not considered as financial service providers.Â
BaFin thus created a broader definition of a crypto asset, which also clarifies the difference between tokens used for payment and exchange, and security tokens.
The paper noted that security tokens are not considered as securities within the German Securities Deposit Act. However, if they are transferable and tradable, they are regulated by EU Prospectus Regulation on the matter.Â
Storage of security tokens is nevertheless a nuanced issue, as businesses not licensed to store generic securities may be able to do so for security tokens, under specific circumstances.
The regulator also clarified who is able to store cryptocurrencies, providing a very generic definition that could be applied to most businesses. The paper explains who can obtain the BaFin authorization:
âAnyone who wants to conduct banking business or provide financial services in Germany on a professional basis or to an extent that requires a business operation set up in a commercial manner.â
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.