German Banks Might Soon Be Able to Manage & Sell Cryptocurrency
According to German financial news publication Handelsblatt, legislation is set to pass by the German Federal Parliament which will enable German banks to sell, store and receive cryptocurrencies beginning in 2020. The new legislation will come in the form of an amendment to the fourth EU money laundering directive, where the “separation bid” was deleted, effectively allowing German banks to hold cryptocurrencies without having to rely on third-party custodians as was previously required by the law. German banks will need to obtain the required license prior to offering digital asset custody solutions, though the legislation will have “extended application deadlines” for the banks. The EU money laundering directive also highlights the fact that “electronic money products are increasingly considered to be a substitute for bank accounts.”
Sven Hildebrandt, head of consulting firm Distributed Ledger Consulting (DLC), has stated that the new legislation is propelling Germany to become a “crypto heaven,” and that “the German legislator is playing a pioneering role in the regulation of cryptocurrencies.” Though some have been skeptical of the new law and it’s potential of compromising consumer protection, the German banking association Bundesvarband deutscher Banken (BdB) has been very receptive of the new legislation. Specifically, the BdB stated that “credit institutions are experienced in the safekeeping of client assets and in risk management and are committed to investor protection and have always been controlled by the financial supervision.” The BdB also highlighted that the new law will enable Germans to invest in digital assets domestically, rather than having to turn to foreign vehicles.
This legislation will ultimately reduce barriers for German investors to gain exposure to digital assets, providing further credibility for both retail and institutional players to continue to enter the space. Also, as Europe’s largest economy and most infuential state, this is very optimistic as the passing of such legislation may set a precedent for other nations throughout Europe to adopt similar laws. As for next steps, Germany's 16 states will make a final decision on the bill, though resistance is not expected at all.
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