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Home News

Cryptocurrency Firms In Germany Will Need BaFin License To Operate

by Max Moeller
Jul 30, 2019 @ 16:50 UTC
in News, Regulation News
Libra Germany
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With the new anti-money laundering regulations (AML) coming at the start of the new year, cryptocurrency firms in Germany will have to apply for a Federal Financial Supervisory Authority (BaFin) license to continue operations.

As Finance Magnates reports, the new regulations are due to Germany’s approval of the Fifth Money Laundering Directive (AMD 5), which categorizes cryptocurrencies and security tokens as “financial instruments” in an attempt to combat money laundering in spaces like auction houses, stamp dealers, and more reports local publication FAZ. On top of this, any company that handles digital assets, from exchanges to wallets, will need to hold a license. This also includes Project Libra, Facebook’s stablecoin, should it come to fruition.

 

german parliament

Notably, crypto derivatives will not fall under these regulations, which come into place in 2020. Instead, derivatives must abide by rules established by the European Securities and Markets Authority (ESMA). However, any future companies looking to operate in the space must abide by the Money Laundering Act. They’ll require a license from Bafin as well as undergo regulatory supervision to ensure consistent follow-through.

Critics of this decision include Frank Schäffler, a member of parliament for the Free Democratic Party in Germany as well as of the Board of Bafin itself. “The federal government acts contradictory,” he states, translated from German. Schäffler then claims that this extra step will cause firms to move to other European countries. He continues, however claiming that “money laundering can flatten any innovative financial business model,” and that these upcoming rules are better than a “regulatory patchwork in Europe.” He also praises this opportunity for a transitional period rather than a hard implementation of these new rules.

A partner of the Hengeler Mueller law firm, Christian Schmies, is more in favor of the Bill. “This is not limited to a minimal implementation, but goes beyond it with additional requirements. That is to be welcomed.” As of now, countries across the world are struggling to implement proper regulations for blockchain technology and the accompanying cryptocurrencies. Schmies is just happy that something is being done. 

In fact, the partner believes that the industry is missing big money from institutional investors because of a lack of regulation:

“The technology has not yet been able to prevail with institutional investors, because a reliable legal framework is missing. However, I still miss clear guidelines on the duties of the crypto guard.”

What do you think about these upcoming regulations? Are they a step in the right direction for Germany? Let us know in the comments below!


Images courtesy of Shutterstock.

Max Moeller

Max Moeller

Max is a cryptocurrency journalist with an affinity for games and emerging technology. After leaving school to start a writing career, he wrote his first article on blockchain and fell down the rabbit hole. Since starting in 2017, Max has worked with multiple blockchain startups and crypto enthusiast spaces, doing his best to educate the world on the nascent technology.

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As a leading organization in blockchain and fintech news, BeInCrypto always makes every effort to adhere to a strict set of editorial policies and practice the highest level of journalistic standards. That being said, we always encourage and urge readers to conduct their own research in relation to any claims made in this article. This article is intended as news or presented for informational purposes only. The topic of the article and information provided could potentially impact the value of a digital asset or cryptocurrency but is never intended to do so. Likewise, the content of the article and information provided within is not intended to, and does not, present sufficient information for the purposes of making a financial decision or investment. This article is explicitly not intended to be financial advice, is not financial advice, and should not be construed as financial advice. The content and information provided in this article were not prepared by a certified financial professional. All readers should always conduct their own due diligence with a certified financial professional before making any investment decisions. The author of this article may, at the time of its writing, hold any amount of Bitcoin, cryptocurrency, other digital currency, or financial instruments — including but not limited to any that appear in the contents of this article.

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