Thanks to a new money laundering law, German banks will be able to retain Bitcoin and offer crypto services in the future. An important step in the adaptation.
From 2020, it will be legal for German banks to sell cryptocurrencies like Bitcoin. German financial institutions are not yet allowed to sell cryptocurrencies directly to their clients, but this could change in the future. Thanks to the planned law implementing the EU's fourth money laundering directive. This should allow German banks to keep Bitcoin and offer other crypto services in the future.
As decided last week in the Bundestag, crypto values in Germany are becoming an official, regulated financial instrument. The new money laundering law allows banks to store and offer cryptocurrencies. This could open up a new business area for German banks from 2020 onwards. Currently, no institute offers its clients virtual assets, except for the Bitwala bank in Berlin. The law has already been passed by the Bundestag and now awaits the consensus of the 16 federal states.
The German crypto community is satisfied with the bill and thinks that Germany is well on the way to becoming a crypto-heaven. If the federal states agree with the proposal, German citizens could hold their digital currencies directly with banks. In doing so, banks will provide appropriate online banking solutions for the full range of assets, including stocks, bonds and cryptocurrencies. This means that crypto owners can access their credit at the push of a button.
The final bill also provides for a deletion of the so-called separation bid. According to him, the re-regulated crypto-surplus transaction should not have been offered together with other regulated banking operations from the same legal entity. Until now, banks had to resort to special subsidiaries or external depositaries.
Interestingly, the Federal Association of German Banks (BdB) welcomes the new regulation. It is argued that lenders already have experience in storing client assets and risk management. The new law could prevent cryptographic money laundering and allow German investors access to the crypto room through domestic funds.
However, not everyone is satisfied with the bill because critics fear less consumer protection. The consumer center of Baden-Wuerttemberg fears that the banks with the new products will sell more aggressively and with all means at new customers. However, there is a risk that customers may not be sufficiently informed about the potential risks of investing in cryptos. When it comes to the safekeeping of crypto assets, Bafin1 supervision must also intensively examine the additional IT risks, since storing Bitcoin places entirely new demands on the technical infrastructure.
The term "crypto values" will now appear and be defined in German law for the first time and is thus considered the core of the new regulation. By definition, crypto-values are digital representations of a value that has not been issued by any public authority or central bank but is used for investment purposes and accepted as a means of payment and exchange. On November 29, 2019, the Federal Council finally adopted the law, which means that the new regulation can enter into force on January 1, 2020.
1) Bafin - Federal Financial Supervisory Authority
The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) is a German public-law institution with legal capacity based in Frankfurt/Main and Bonn. It is subject to the legal and technical supervision of the Federal Ministry of Finance.