Breaking news! Germany officially classifies cryptocurrencies as financial instruments

Original title: Big news! Germany officially lists cryptocurrency as a financial instrument Source: Blockchain Knight

Germany’s financial regulator has published guidelines for classifying cryptocurrencies as financial instruments. The move further expands the definition of financial instruments to cover all types of digital assets, while the previous version only covered security tokens.

BaFin reiterates Germany’s cryptocurrency classification

In a press release published on Monday (March 2, 2020), Germany’s Federal Financial Supervisory Authority (BaFin) described cryptocurrencies as:

A form of digital asset that has not been issued by any central bank or guaranteed by a public institution and is not necessarily linked to a currency prescribed by law, but has the legal status of currency or money, but can be accepted as a medium of exchange between natural or legal persons and can be transmitted, stored and traded electronically.

According to BaFin, its new classification echoes the guidelines of intergovernmental bodies such as the Financial Action Task Force (FATF).

Meanwhile, the news is the second landmark cryptocurrency classification to emerge in recent days, with an Australian judge recently ruling that cryptocurrencies are investment vehicles, meaning that cryptocurrencies can be used as collateral in the country.

BaFin’s new cryptocurrency classification announcement is also part of the country’s move to adopt the fifth EU Money Laundering Directive (AMLD5), which came into effect on January 1, 2020.

As previously reported, part of the AMLD5 adoption process involves changes to Germany’s Banking Act and Payment Supervisory Services Act.

About Cryptocurrency Custody

As part of new German Federal Financial Supervisory Authority guidelines on cryptocurrencies, crypto custodians will need to obtain a license from the regulator to provide services in the country.

Cryptocurrency custodian platforms that have been operating in the country without a license must complete their applications by the end of November 2020, and must be ready for application by March 30, 2020.

In addition, cryptocurrency custodians already registered in other EU countries cannot transfer their operating license "passport" to Germany. Instead, such platforms must apply for approval to continue providing cryptocurrency custody services in Germany.

Earlier in February 2020, it was reported that BaFin had received applications for cryptocurrency custody licenses from no fewer than 40 banks.

In addition to banks, Germany’s second-largest stock exchange, Boerse Stuttgart, has also recently added a new Bitcoin exchange-traded product (ETP), with the country’s stock exchanges also heavily involved in the cryptocurrency market.

It can be seen that the current news is potentially positive for cryptocurrencies, indicating that cryptocurrencies are being accepted by more and more countries.

Editor-in-charge: Tang Jing