Bitcoin and cryptocurrencies are now legal financial instruments in Germany, according to the new guidance issued on Monday by the country’s Federal Financial Supervisory Authority or BaFin.
“[They are defined] as digital representations 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.”
The new classification comes after BaFin moved to update its anti-money laundering (AML) laws.
The development provides a mandate that crypto custodial firms should obtain licenses. For now, unlicensed institutions already offering crypto custodial services in Germany will not receive penalties as long as they show intent to obtain a license before March 30, 2020, and apply before the end of November 2020.
BaFin provides a clear definition of what constitutes a crypto custodian firm.
“The legal facts of the crypto custody business are fulfilled by custodians who take crypto values into care as a service for third parties. This primarily includes service providers who store their customers’ crypto values in a collective inventory without the customers themselves being aware of the cryptographic keys used.”