Not only German providers but also foreign companies are interested in applying for a license to offer crypto custody services in Germany. The fourth part of our ongoing blog series “Let’s Build a Crypto Custodian” shows the different options for foreign providers of these services to obtain a BaFin authorization.
Since the catalogue of financial instruments in the German Banking Act was expanded by the introduction of crypto assets, the question arises if blockchain-based e-money units qualify as crypto assets at the same time. If so, e-money tokens would not only be payment units but also financial instruments and therefore could trigger authorization obligations according to the German Banking Act.
The fifth AML Directive was supposed to ensure that certain central service providers of the crypto sector comply with AML obligations. Since Germany exceeded the requirements of the amending directive with the transposition into national law, the question remains which crypto businesses are subject to the German Money Laundering Act as of 2020.
Financial service providers and banks are required to develop an adequate risk managing strategy for their business operations. What are the requirements that BaFin is going to place on crypto custody service providers that additionally have to deal with crypto-specific risks?
Even though transactions of cryptocurrencies generally do not require intermediaries for processing, the crypto market has seen some service providers assisting their customers with crypto payment transactions. Can these services be subject to authorization with regards to the German Payment Services Act (ZAG)?
As of next year, offering crypto custodian services to German customers will be possible also in case an authorization has not been obtained yet, if the service providers fulfil certain requirements and meet specific deadlines set out in the new provisions. But what exactly will the service providers need to do so that the grandfathering rule is applicable to them?
As of next year, the crypto custody service will be introduced in Germany as a new form of financial service that is subject to an authorization requirement. One of the key questions for future crypto custodians will be “what are the regulatory requirements that have to be fulfilled in order to obtain the mandatory BaFin authorization?” The second part of our multi-part blog “Let’s Build a Crypto Custodian” tackles the question of the required minimum starting capital.
Most business models in Germany that are crypto related require a BaFin authorization prior to start of operations. One of the major questions for blockchain startups when preparing a BaFin application is how much capital must be proven towards BaFin for a successful application. A brief summary:
Last week, the German Parliament finally decided on how to regulate crypto custodians as of 2020. In the first part of our blog series “Let´s build a Crypto Custodian” we take a look at the requirements that managing directors of crypto custody service providers will have to fulfil in order to be accepted by BaFin.