Inspired by a recently approved law, more than 40 German banks have expressed their interest in providing cryptocurrency custody services. BaFin, the country’s financial regulator, has received letters of interest from those banks. A local media outlet Handelsblatt reported that the banks’ interest to launch digital currency-related services goes in line with a new update anti-money laundering law that was passed earlier this year.
The law requires financial entities to get a license from the Federal Financial Supervisory Authority of Germany (BaFin) before they can run stocks, bonds, and cryptocurrency-related activities. However, companies already providing similar services have been given a deadline of November 2020 to obtain such a license. They will also have to inform BaFin by the end of March whether they wish to get such a license and continue operation.
New European law
In the meantime, the fifth iteration of the European Money Laundering Directive, known as AMLD5 was launched, which changed a number of avenues related to financial operations across the EU region. Such changes affected the way financial institutions are supposed to deal with digital assets as well. In Germany, financial policymakers started to allow financial entities to provide crypto asset-related services apart from the traditional range of stocks and bonds. Although no German bank has officially started crypto services yet, rumours are there that many banks are trying to make mainstream crypto banking a reality, actually preparing well for adoption and recognition of this controversial asset.
According to the report of Handelsblatt, government officials supposedly said that more than 40 letters of interest have been received from banks “for permission to operate the crypto custody business in the future.” However, they did not disclose the bank names. Frank Schäffler, a member of German Federal Parliament, said on cryptocurrency trend-
“The market is growing faster than the Federal Ministry of Finance has predicted. That is both a blessing and a curse. The high demand for crypto custody licenses shows that companies are increasingly adopting cryptocurrency technology, but is also the result of the new legislation.”
Crypto services are already in place
If things work as planned, banks willing to offer crypto custody would join the growing ecosystem. Institutions offering cryptocurrency services are already there in Germany. Boerse Stuttgart, the country’s top-ranked stock exchange, for instance, launched its crypto trading platform. “At Germany’s first regulated trading venue for digital assets, users can currently trade digital currency against the euro. Additional digital assets are to be added”, they stated at the launching ceremony.
However, among banking institutions, Solarisbank, a Berlin-based technology firm, offered crypto services for the first time in the country. The company also created Solaris Digital Assets, a crypto subsidiary project, in December 2019.
Michael Offermann, who has been appointed the head of crypto banking, said: “We have been dealing intensively with the topic of crypto custody for a year and a half. The new regulation in the new Money Laundering Act is a good time to start practically. After all, we are not a research institute, but a commercial bank.”
If the bank gets a license as requested, it will collect digital tokens from customers and store those. According to the of CryptoGlobe, an online media outlet, the new German law could make the country the next crypto haven as it will permit banks to store and sell virtual currencies.
Other banks are also interested in crypto services
Banks outside Germany are also interested. Blockonomi recently reported that five US senators presented Senate bill 2594 in January, which has passed first reading. The bill is supposed to make legitimate for Hawaiian banks to store digital assets, a category which includes “virtual currencies,” “digital securities,” and “open crypto tokens.” The content of the bill strongly indicates digital currencies will be storable by banks, which would be another giant step towards embracing cryptocurrencies for common people.