Through a press release that was issued on Monday, the German Federal Financial Supervisory Authority, or BaFin, gave cryptocurrencies a new definition. This definition describes crypto as a representation of value that no public body or central bank has issued or guaranteed.
New Definition, New Opportunities
The definition states that it isn’t necessarily linked to a currency specified by law, and neither does it have the legal status of money or currency. However, the definition describes it as being accepted as a medium of exchange through legal or natural persons and can be stored, traded, or transmitted electronically.
This new classification from BaFin now coincides more with the guidelines that agencies like the Financial Action Task Force (FATF) had given in the past. The news stands as the second major landmark when it comes to crypto classification after a Judge in Australia officially ruled crypto to be an investment vehicle. By the extent of Australian law, crypto will now be capable of being used as collateral within that country.
Pushing For FATF Integration
The new crypto classification announcement stands as part of BaFin’s attempt to move the country to adopt the new EU Money Laundering Directive, or AMLD5, as well. The AMLD5, having started in January 2020, mandates the change Germany’s Payment Supervision Services Act, as well as its Banking Act.
Through the new guidelines that BaFin had pushed out, custodian services for cryptocurrency industries will have to obtain a license from the country’s financial regulator. Crypto custodial services that have yet to apply for licensing within Germany’s borders have until the end of November 2020 to get it. However, the companies must show readiness to obtain these licenses before the end of March 2020.
Licensing Needed, Passporting Rejected
An important thing that BaFin noted is that custodians cannot “passport” operating licenses from other EU nations to Germany. The firms need to apply for licenses within Germany itself, instead of relying on the licensing of another country.
Earlier this February reports started to come out that 40 banks within Germany have requested licensing for crypto custodian services. Aside from the banks making a hard push, Germany’s stock exchange has a significant involvement within the crypto market. Boerse Stuttgart, the second-largest stock exchange within Germany, has recently added an inverse Bitcoin-based Exchange-Traded Product, or ETP.
Germany is pushing hard for mainstream crypto integration, something that stands as an inevitability in the greater scheme of things.