Already since the beginning of the legislative process of introducing crypto custodian services into the German Banking Act (KWG) it was uncertain if these new financial service providers could safeguard security tokens, meaning digital securities, for their customers. BaFin finally answered that question in its new leaflet.
By regulating crypto custodian services as a financial service, the German legislator chooses a non-european but national regulatory approach. But will this national crypto custodian license potentially be vaild in other european countries as well?
The German federal government plans to design crypto custody services as exclusive financial services. In addition to the custody of crypto assets, the crypto custody service providers shall not be permitted to offer any other financial or banking service that would also require a BaFin authorization. Crypto custody service providers shall therefore be limited to their core business but shall also play a central role in the German crypto market.