Germany takes a step toward adoption
The German parliament today passed a bill allowing banks to sell and store cryptocurrencies from January 1st, 2020. The new legislation will require current custody providers and cryptocurrency exchanges operating in the country to take steps, before the end of the year, to apply for a German license.
The legislation enables banks to sell and store cryptocurrencies from January 1, 2020. Other providers will now require a German license.
This law will not only put Germany, the world’s fourth biggest economy, at the forefront of regulation in cryptocurrencies, but it also heralds a milestone in the adoption of cryptocurrencies. This should serve as an example and a possible ‘test case’ for other countries to follow suit.
Germany leads the way in crypto regulation, for sure. This leads to institutional investors coming to Germany, as they want security and regulation. Germany is well on its way to becoming a crypto-heaven.
Sven Hildebrandt, a partner at German crypto consultancy DLC, told Decrypt.
The bill was passed by the Bundestag, the lower house of the German Parliament, earlier this month, and approved by the upper house, the Bundesrat, today. It amends a clause in the European Union’s Fourth Anti-Money Laundering Directive that currently prohibits banks from dealing directly in cryptocurrency. It allows them to legally sell and store cryptocurrencies, just as they do stocks and bonds, to retail as well as institutional investors.
Exchanges such as Binance and Kraken, and other digital asset custodians, will need to obtain a license from the German regulator, Bafin, if they wish to continue operating in Germany, said Hildebrandt. In order to apply for this, companies will need a German legal entity with two directors operating in the country by the end of 2019. They also need to signal their intention to apply to Bafin for a license before 31 March 2020, and submit the application prior to 31 November 2020.
He said this leaves companies wishing to continue provide services in Germany with three options: to set up a German company before the end of this year, and then apply for a licence; to work with a cryptocurrency custodian who is licensed in Germany, or to work with a licence provider, which can offer a “complex but clever” solution.
Companies have already begun to act on the new German law. Crypto Storage, a subsidiary of Swiss financial services provider, Crypto Finance announced plans to open an office in Frankfurt today.
Hildebrandt said that the new law will be a major breakthrough. “If you can hold [cryptocurrencies] in your bank account, that is massive for adoption,” he said. “I believe that this will act as a role model for all the other laws that will be coming into force Europe wide. Germany is driving crypto adoption forward and wants to play a leading role in Europe as well. One of the key challenges is keeping private keys safe.”
This is great news for the industry
Not only is this great news for Germany, it is great news for the crypto industry as a whole. A key factor in future price movements will rely heavily on adoption and regulation. The more countries that begin to offer sensible laws around the adoption of digital assets, the better it will be for everyone.
This move can serve as an example for the rest of Europe and the world. The United States of America should really take note here and follow suit. I wouldn’t be too mad if the US threw out the tax on every trade law that is currently in place as well. I’m sure other countries will be monitoring this to see how well it actually works out.
What do you think of this? Is it good news for the whole industry? Are we on our way to world-wide adoption?