Germany Officially Declares Crypto as Financial Instrument
The German Federal Financial Supervisory Authority (BaFin) has just released guidelines, classifying crypto as a financial instrument.
According to a press release issued on March 2, BaFin described crypto as digital representation of value that has not been issued or guaranteed by any central bank or public body. The regulator said cryptocurrencies are not necessarily linked to a currency specified by law. Hence, they have no legal status of a currency or money.
Nonetheless, BaFin regards crypto as a medium of exchange accepted by natural or legal persons and can be transferred, stored and traded electronically.
The new BaFin crypto regulation will see to it that crypto custodians obtain a license from the regulator before they can offer their services in the country. Such businesses that are already operating in the country without a license are to apply for one before November 2020.
Furthermore, crypto custodians which are already registered in other EU nations cannot transfer their operating license to Germany. Such platforms should rather apply for new approval to offer crypto custody services in the country.
According to BaFin, its new classification is in line with the guidelines of intergovernmental agencies like the Financial Action Task Force (FATF). The classification is also part of the country’s steps to adopt the 5th EU Anti-Money Laundering Directive (AMLD5) which began on January 1, 2020. Part of the AMLD5 adoption process includes changes to Germany’s Banking Act and Payment Supervision Services Act.
Featured image courtesy of Shutterstock. Source:Cryptopress.