BaFin Supports Banks’ Growing Interest in Crypto Custody Services, New Report Reveals
Several German Banks have sought permission to set up digital asset custody businesses. This is according to a report by news outlet Handelsblatt. The Report indicates that Germany’s financial regulator BaFin acknowledged the receipt of over forty applications from parties intending to provide custodial services for cryptocurrencies.
BaFin Empowering Financial Institutions
The country recently overhauled its Money Laundering Act. The changes grant banks and other domestic financial providers the right to administer traditional securities including stocks and bonds, besides digital assets such as BTC, ETH, and XRP.
Digital currencies have gained in popularity in recent years. The crypto market estimated to stand at $288.3 billion is ballooning. Meanwhile, BaFin has had to contend with anonymous trading and criminal activities facilitated by these burgeoning assets. Illegal activities include money laundering and financing global terrorists. BaFin affirms that businesses must have their approval to offer the said services.
The new regulations come at the back of the European Union’s introduction of a fifth anti-money laundering directive (AMLD5). AMLD5 prescribes strict adherence to updated KYC and AML processes.
Market Growth Surpassed Official Projections
Frank Schäffler, an FDP member of the Bundestag, averred that market growth has surpassed the Federal Ministry of Finance’s projections. There’s a rising demand for cryptocurrency custody licenses indicative of the increasing adoption of blockchain technology. He credited part of the growth to the introduction of the new legislation.
BaFin has directed Crypto-related firms to institute compliance mechanisms regarding the storage of crypto assets or conduct of businesses dealing in them by Nov. 2020.