The German financial regulator, BaFin, has issued a notification classifying cryptocurrencies as financial instruments. According to a statement released Monday, BaFin has expanded the definition of financial instruments to include more digital assets. Previously, only security tokens were included in this category.
In the press release, cryptocurrencies are classified as financial instruments:
“A digital representation of a value that has not been issued or guaranteed by a central bank or a public body and which is not necessarily related to a currency specified by law and which does not have the legal status of a currency or money, but is accepted as a medium for exchange by natural or legal persons and can be transmitted, stored and traded electronically. “
According to BaFin, this definition falls within the guidelines of intergovernmental agencies such as the Financial Action Working Group (FATF). Also, defining the role of cryptocurrencies is part of Germany’s quest to adopt the Fifth EU Money Laundering Directive (AMLD5).
Part of the adoption process of AMLD5 requires amendments to the Law on payment supervision services and the Banking Law.
Companies that offer crypto custody need a license
As part of the new guide for crypto companies, BaFin has provided that companies offering cryptocurrency custody must obtain a license. This licensing process must be initiated in Germany even if those companies already have a similar license from another European country.
The deadline for registration is March 30, 2020, and the process must be completed by November.
At the beginning of February 2020, the media reported that BaFin had received authorization requests from 40 banks wishing to offer crypto custody services. In addition, Boerse Stuttgart – Germany’s second largest stock exchange – recently added a new Bitcoin ETP.
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