According to BaFin, its new classification echoes the guidelines of intergovernmental agencies like the Financial Action Task Force (FATF).
Germany’s financial regulator has released guidelines classifying crypto as financial instruments. This move further expands the definition of financial instruments to include all kinds of digital assets with the previous paradigm only covering security tokens.
BaFin Clarifies Crypto Classification in Germany
In a press release issued on Monday (March 2, 2020), the German Federal Financial Supervisory Authority (BaFin) described crypto as:
[A] digital representation of a value that has not been issued or guaranteed by any central bank or public body and is not necessarily linked to a currency specified by law and that does not have the legal status of a currency or money, but is accepted as a medium of exchange by natural or legal persons and can be transmitted, stored and traded electronically.
According to BaFin, its new classification echoes the guidelines of intergovernmental agencies like the Financial Action Task Force (FATF). The news marks the second landmark crypto classification to emerge in the last few days with an Australian Judge recently ruling that crypto is an investment vehicle — meaning virtual currencies can be used as collateral in the country.
BaFin’s new crypto classification announcement is also part of the move by the country to adopt the fifth EU Money Laundering Directive (AMLD5) which began on January 1, 2020. As previously reported by Bitcoinist, part of the AMLD5 adoption process involves changes to Germany’s Banking Act and Payment Supervision Services Act.
Concerning Cryptocurrency Custody
As part of the new BaFin crypto guidelines, cryptocurrency custodians will need to obtain a license for the regulator to offer their services in the country. Crypto custodial platforms already operating in the country without a license have until the end of November 2020 to apply for one but must show readiness to do so before March 30, 2020.
Also, crypto custodian already registered in other EU nations cannot “passport” their operating license to Germany. Instead, such platforms must apply for approval to offer crypto custody services in the country.
Earlier in February 2020, reports emerged that BaFin received crypto custodial licensing applications from no fewer than 40 banks. Apart from banks, the country’s stock exchange is also significantly involved with the crypto market as Boerse Stuttgart — Germany’s second-largest stock exchange recently added a new inverse Bitcoin Traded Product (ETP).
What do you think about Germany’s new classification of crypto as financial instruments? Let us know in the comments below.
This is a reprinted article