This post was most recently updated on September 30th, 2020
Berlin, Frankfurt According to government officials, the Financial Supervisory Authority better known by Bafin has already received more than 40 expressions of interest from banks for permission to operate the crypto custody business reports Handelsblatt a German media outlet.
The government is also regulating the cryptocurrency business with the new Money Laundering Act. Banks can benefit from the new opportunities.
The new Money Laundering Act no longer only allows banks to offer and keep traditional securities such as stocks and bonds. Since the beginning of the year, the financial institutions have also been able to offer their customers online banking cryptocurrencies such as Bitcoin, Ethereum or Ripple at the push of a button.
Digital currencies have grown enormously in importance in recent years. Global market capitalization is increasing. But the big problem is anonymity when trading digital currencies. This makes them vulnerable to abuse by criminals or terrorists.
“The previous business models that were too lax when identifying customers have to be adjusted or discontinued,” says Berlin. The new regulation also increases consumer protection.
According to the draft law, cryptocurrencies are digital representations of a value that has not been issued or guaranteed by any central bank or public body and does not have the legal status of currency or money. Not only cryptocurrencies are included, but also tokens or coins, which are treated as crypto assets.
Germany as a location factor
With regard to expressions of interest, government circles are satisfied that good financial market regulation can also be a location factor.
“We have almost a unique selling point that will help us bring the reputable providers to Germany,” it said in Berlin.
The Bafin had warned companies that, since the Money Laundering Act came into force on January 1, 2020, a financial supervisory license was required for the crypto custody business. However, the law provides for transition periods until the end of November 2020 for companies that have previously worked in this business. For the transitional period, however, a notification must be received by the Bafin by the end of March.
The FDP -Bundestagsabgeordnete Frank Schäffler welcomes the high number of expressions of interest.
“The market is growing faster than the Federal Ministry of Finance has predicted. It is both a blessing and a curse, ”the financial expert told the Handelsblatt. “The high demand for crypto custody licenses shows that companies are increasingly adopting blockchain technology, but is also the result of the new legislation.”
One of the first institutes to offer this is the Berlin Solarisbank. For this, the bank founded the subsidiary Solaris Digital Assets. In the event of a successful application for a custody license, the money house wants to store Bitcoin and other virtual currencies on behalf of the customer.
“We have been dealing intensively with the topic of crypto custody for a year and a half,” Michael Offermann, head of crypto banking at the institute, had recently told Handelsblatt . “The new regulation in the new Money Laundering Act is a good time to start practically. After all, we are not a research institute, but a commercial bank. “
Solarisbank has a full banking license and offers its liability umbrella to numerous German financial technology start-ups. The Berliners are convinced that they will soon occupy a future market.
“Digital assets will fundamentally change the financial market. As soon as it becomes easier to buy and store Bitcoin and Co., we expect strong growth, ”said Offermann.adding that the sales potential in the first year was already in the seven-digit range.
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