The German Federal Financial Supervisory Authority as Recognise Cryptocurrency As A Financial Instrument in the country. The Agency made this known when it published an article on Cryptocurrency with the headline “requirement Leaflet: Notes on the facts of the crypto custody business”. The article contains information on
- I. The facts of the crypto custody business
- II. Differentiation from other regulated activities
- III. License requirement of the crypto custody transaction
- IV. Transitional provision § 64y KWG
- V. Notes and addresses.
Below are translated part of the blog post.
“III. License requirement of the crypto custody transaction
Pursuant to section 32 ( 1) sentence 1 of the KWG , written permission from BaFin is required for anyone who wants to conduct banking business or provide financial services in Germany commercially or to an extent that requires business operations, 16. The fulfillment of an alternative is sufficient to justify the licensing requirement of the business. The legal form of the company (natural person, partnership, legal person) is not important.
Banking and financial services transactions, even if the scope of these transactions does not objectively require a commercially established business operation, are conducted on a commercial basis if the operation is designed for a certain period and the operator pursues it with the intention of making a profit. The latter also includes the intention of avoiding losses.
Alternatively, the criterion of the requirement of a business operation set up in a commercial manner applies. It is irrelevant whether a business operation that is set up in a commercial manner is actually carried out. The only thing that is decisive is whether the establishment of such a business is objectively required for the financial services business according to the banking traffic concept ( ie from the perspective of a proper businessman). This is to be determined in individual cases and can also result in a comparatively small extent if several banking / financial services businesses are operated at the same time.
The business only falls under the reservation of permission pursuant to Section 32 ( 1) KWG if it is (also) operated domestically. The business is operated domestically if the company is domiciled in Germany, even if it does business domestically only with non-residents. The business is also conducted domestically if the company establishes a legally dependent branch here or maintains another physical presence from which it does business – even if only with non-residents.
Finally, there is a domestic connection if the offer from abroad using remote communication means is aimed exclusively at cross-border services, without the maintenance of a brokerage network or a physical presence, and especially for legal or natural persons who are domiciled or habitually resident in the Federal Republic of Germany. Further information can be found in the leaflet “Information on the obligation to obtain a license pursuant to section 32 ( 1) KWG in conjunction with section 1 ( 1) and ( 1a) KWG of cross-border banking transactions and/or financial services provided” 17.
The possibility for cross-border activities for institutions from the European economic area in other banking and financial services on the basis of a notification procedure (“European passport”) does not exist in the crypto custody business (Section 1 ( 1a) sentence 2 no. 6 KWG ). The fact follows from the national implementation of the amendment directive, which has not been specified uniformly within the EU .”
Read the full post from Bafin’s website by clicking here.
We are glad that Germany financial system as Recognise Cryptocurrency. We pray for other remaining countries to officially recognise cryptocurrency too.
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