The Crypto custody business has been introduced as a regulated financial service in Germany a little over a year ago. But even prior to BaFin issuing the first explicit authorization to the first provider, the German legislator already plans to change the legal definition of the activity again.
The German legislator intends to also extend the crypto custody business with the introduction of crypto securities. What does crypto custody business consist of in the future, what will be permitted and what will be prohibited?
BaFin just published its “Guidelines on application for authorization for crypto custody business” shortly after the deadline for the so-called grandfathering option for crypto custodians expired. A summary:
Reporting is among the most important duties of all institutions being under supervision of BaFin and the German central bank. But what are the reporting obligations of licensed crypto custodians and are there differences between crypto custody service providers and other financial service institutions?
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.
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.
The intended introduction of crypto custody services leaves room to interpretation for the question if the storage of private keys for multisig wallets will require authorization or not. Are multisig fiduciaries going to be crypto custody service providers?
With the Crypto Custodian Service, the German legislator plans to introduce a completely new fiancial service which requires service providers to obtain a BaFin licence. Additionally, Crypto Assets shall in future explicitely qualify as financial instruments. But what does this mean for blockchain fintechs?