In a landmark decision, the German Federal Financial Supervisory Authority (BaFin) granted four licenses to Switzerland-based Crypto Finance. The decision is important because it further strengthens the market position of Crypto Finance and puts Germany in a more favorable position when it comes to leading the cryptocurrency market.
The decision is just a small part of an overall more favorable approach towards crypto that’s started to develop among traditional financial institutions. It goes to show that the crypto market is now more widely accepted in the world of finance.
What Happened?
The German Federal Financial Supervisory Authority (BaFin) is a state regulatory agency in Germany. It issues licenses to companies providing financial services and products. It’s issued a license to Crypto Finance, a Swiss company with subsidiaries in Germany.
This means Crypto Finance is now licensed to provide crypto-trading services in Germany. It already has the license to do so in Switzerland. European countries are opening up to crypto services as the US market is becoming more heavily regulated. The changes in the US regulations are much written about, and CCN is authority in this niche.
Deutsche Börse Plans
Crypto Finance is a subsidiary of Deutsche Börse. It has come up with ambitious plans regarding cryptocurrency trading. Deutsche Börse is planning to launch its own cryptocurrency, DBDX. The currency should especially target institutional investors. The news of obtaining the proper German licenses comes amidst these rumors.
Therefore, many are reading this news as a sign that Germany is ready to open its financial institutions up to work with cryptocurrencies. The new licenses and services that the company will provide put it at the center of this new crypto ecosystem emerging in Germany.
Stijn Vander Straeten, the CEO of Crypto Finance Group, issued a statement. “We are excited that Crypto Finance (Deutschland) GmbH is now licensed by BaFin, the highest benchmark in regulatory oversight, as a crypto custody provider in Germany. Our offering is one of the few to meet these exceptionally high standards. This demonstrates our commitment to transparency and security but also positions us as a trusted entity in the market, contributing to developing a reliable ecosystem for crypto assets.”
Markets in Crypto-Assets (MiCA)
The European Union and Germany, in particular, are open to innovative financial markets, but they will be much more heavily regulated than they were when they emerged in the US. Markets in Crypto-Assets (MiCA) is a regulatory framework that allows cryptos in Europe but makes them more manageable.
It’s also important to note that a large crypto trading company – Binance, has just withdrawn from European markets due to the complexity of its regulations. On the other hand, Crypto Finance has decided to go through the complicated process of obtaining the proper licenses.
Eric Viohl, managing director at Crypto Finance (Deutschland) GmbH, issued a statement. “Crypto Finance offers a comprehensive approach as a one-stop-shop solution for digital assets. Our commitment to covering the entire value chain sets us apart, and we are now proud to be able to achieve significant milestones in Germany, where we offer highly regulated services. Our offering goes beyond trading to include settlement, custody, and post-trade services, creating a seamless experience for institutional investors seeking access to the dynamic world of digital assets.”
More on Crypto Finance
Crypto Finance AG, a financial technology company founded in June 2017, provides blockchain-related services through its three divisions: Asset Management, Brokerage, and Storage.
The company is based in Switzerland and has a German arm as well. It offers financial digital solutions. Its licenses to work in Germany allow it to provide brokerage services, custody, infrastructure, and tokenization solutions for financial institutions. It’s also the first FINMA-approved manager of collective assets for digital assets, providing alternative investment fund offerings.
Crypto Regulations in Germany
Due to how volatile they are, the laws in Germany don’t view cryptocurrencies as currencies but as financial assets such as stocks or bonds. Germany also proactively regulated cryptocurrencies, which has made its growth in this area somewhat slower than that in the US.
The Federal Financial Supervisory Authority plays an important role in Germany’s crypto environment. It oversees the regulation of its markets, including cryptocurrency exchanges, brokers, and custodians.
How is it Different?
Some of the key crypto features available in the US aren’t available in Germany due to the way the market is regulated. The most important of these is online anonymity. The money-laundering laws set up in Germany are known as Know Your Customer Laws. These don’t allow users to use digital assets without providing proof of identity.
Now, when cryptos are more widely used and accepted across the globe, the US will probably take note of European regulations and implement a version of this law. Some users feel that this is the end of crypto as it once was in the US.
European Approach to Cryptocurrencies
The EU has had a somewhat unique approach to cryptocurrencies. It hasn’t been at the forefront of technology and wasn’t among the innovators. However, when the crypto industry is somewhat accepted, the EU wants to become a hub for it.
However, there’s one thing the EU is great at: complex regulation. At the intersection of crypto and traditional finance, this is the talent everyone is looking for. For some early adopters, this goes against everything cryptos used to be, but for conventional financial institutions, an excellent legal framework makes operating crypto assets easier.
European Rivalries
Now, when many crypto institutions are moving to Europe, there’s a rivalry between EU countries on which one will be the leader in this innovation. Many have wanted that status as it shows that EU economies can also work in an innovative environment and the high-tech industry.
The two main contenders for the spot will be Germany and Ireland. The case for Germany is obvious, and steps such as this one are a part of getting Germany there. Ireland has worked on its status as the EU’s high-tech power and is providing many benefits to its crypto investors that other countries can’t.
Cryptos Losing Some of the Novelty
A general change in attitude towards crypto is happening in real-time. Traditional companies such as banks, stock markets, and pension funds are all turning to crypto as one of the assets under their belt. Luxury brands are also accepting crypto payments, and professional athletes are paid in crypto.
All this is to say that those who believed in crypto from day one have won. However, at the same time, cryptos have lost some of their novelty, and projects such as the ones now starting in Germany don’t seem that exciting.
Conclusion
Crypto Finance, a Swiss-based crypto company with a subsidiary in Germany, has the proper licenses needed to operate in the country. This happens just as the company has announced it will launch its own cryptocurrency. The new currency will be focused on working with traditional financial clients.
This is part of a broader push to prepare the EU for a crypto venture. It will be a somewhat different venture than one in the US, with more regulations and less freedom for the end-users, but an interesting one nonetheless.
