Germany Harshly Regulates Crypto Assets as of January 1, 2020

At the end of July, the German Federal Government approved the draft bill for the transposition of the 5th EU Anti-Money Laundering Directive. The anticipated amendments establish crypto assets (so-called “Kryptowerte”) as a financial instrument to the German Banking Act.

Furthermore, crypto asset custody is being introduced as a new type of financial service and will, therefore, require the authorization of BaFin. As a consequence, all companies handling crypto assets will be subject to the high requirements and standards that have been in force on the traditional capital markets for decades.

The approach of the German legislator to a comprehensive regulation for the crypto asset sector is an essential step for the evolution of the industry. Progressive regulation enables the blockchain ecosystem to offer products on a solid legal basis. Therefore, it can be viewed very valuable that Germany took the initiative and now starts regulating crypto assets on a broad scale.

About the Authors:

Benjamin Schaub is a project manager and research assistant at the Frankfurt School Blockchain Center (FSBC). His interests include blockchain regulation and governance as well as blockchain use case development.

Prof. Dr. Philipp Sandner is head of the Frankfurt School Blockchain Center (FSBC) at the Frankfurt School of Finance & Management. In 2018, he was ranked as one of the “Top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. Further, he belongs to the “Top 40 under 40” — a ranking by the German business magazine Capital. The expertise of Prof. Sandner, in particular, includes blockchain technology, crypto assets, distributed ledger technology (DLT), Euro-on-Ledger, initial coin offerings (ICOs), security tokens (STOs), digital transformation and entrepreneurship.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.