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Banks can get into the crypto business

Through the implementation of the fifth anti-money laundering directive, crypto values ​​have been included in the German Banking Act (KWG). This long-awaited regulation of cryptocurrencies now enables banks to do business alongside traditional banking also to store crypto values ​​for their customers.

New business opportunity for banks

Cryptocurrencies were not legally defined for a long time. Therefore, it was only possible to orientate oneself on the former opinion of the Federal Financial Supervisory Authority (BaFin). With the change in the law, crypto values ​​are now defined as digital units of value that are issued by private individuals, transmitted electronically and accepted as a means of payment in commercial transactions or used for investment purposes. Only Utility tokenthat can only be used to relate services in the issuer's network are not covered by the definition.

With the change to the KWG, banks are now also opening up the business area related to crypto currencies. More than 40 banks should already submit an expression of interest for a Permission to operate the crypto custody business submitted to BaFin. In the near future, consumers should therefore be able to store crypto currencies such as Bitcoin or Ethereum via conventional banks in addition to euros, dollars and the like.

Banks require a separate license

In order to enter the so-called crypto custody business, however, banks need a separate one License that must be applied for from BaFin. If a company already offers crypto custody transactions, it can do one thanks to the transition period until November 2020 Application for permission from BaFin put. If a bank would like to enter this field of activity, the application must be submitted before starting business.

Crypto business and conventional banking go hand in hand

First of all, it could be inferred from the draft law that crypto custody transactions should not be carried out together with other transactions that require authorization. As a result, a bank would have had to decide whether to pursue conventional banking business or to limit itself to cryptocurrencies. However, this rule was deleted on the recommendation of the Finance Committee. Banks can therefore too work with crypto values ​​in addition to their normal work.

If you are interested in a BaFin license for crypto custody business, our experienced lawyers will be happy to help you.

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Blockchain technology is finding its way into banking
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Benjamin Kirschbaum

Lawyer Benjamin Kirschbaum works at our Berlin office primarily in the areas of blockchain and cryptocurrencies as well as general civil law, administrative law and church law / religious law.

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