Germany’s BaFin approves Coinbase’s cryptocurrency custody license

Since January 2020, all cryptocurrency companies operating in the German market need to obtain approval from BaFin.

Germany’s Federal Financial Supervisory Authority (BaFin) has issued a license for cryptocurrency custody business to Coinbase’s German subsidiary.

In a statement on Monday, BaFin said it had issued the country’s first such license to Coinbase for a cryptocurrency exchange related to digital asset custody. The regulator said it would form an interdisciplinary, cross-departmental team to handle any issues related to cryptocurrency custody due to the lack of precedent.

German lawmakers passed legislation in late 2019 requiring companies looking to operate cryptocurrency custody businesses to obtain approval from BaFin. The new law came into effect on January 1, 2020, but provided a transition period for crypto companies already operating in the country.

According to BaFin’s explanation of the aforementioned law, businesses that “offer virtual currencies for fiat currencies and vice versa” or for other cryptocurrencies are considered regulated financial institutions. However, the regulator has previously warned potential investors that retail consumers have little protection against losses in the crypto space — a warning that BaFin reiterated in its statement on Coinbase’s license.

Since its direct listing in the U.S., Coinbase’s stock price has fallen below the initial reference price of $250 it received from Nasdaq. At the time of writing, COIN is priced at $239.49, having fallen by about 30% since April 14.