Starting next year, new Anti-Money Laundering (AML) regulations will require German cryptocurrency businesses to hold a Federal Financial Supervisory Authority (BaFin)-issued license, Cointelegraph Deutschland reported on July 24.
Possible innovation obstruction
Per the report, the new regulations will require cryptocurrency-related businesses such as exchanges and wallet providers to be licensed by BaFin and comply with AML regulation, since crypto assets will be considered a financial instrument starting on January 1, 2020. According to local media FAZ, Bundestag Free Democratic Party Frank member Schäffler commented suggesting that the government is hurting local innovation and forcing crypto businesses to move to other EU states.
Some welcomed regulatory clarity in Germany
On the other hand, Christian Schmies, partner of the law firm Hengeler Mueller, welcomed the regulation suggesting that more clarity will allow for further growth in the industry. According to him, “the technology has not yet been accepted by institutional investors because a reliable legal framework is missing.” While Schmies considers the classification as a financial instrument to be a step in the right direction, he also notes that the space still needs more clarity.
As Cointelegraph reported yesterday, BaFin recently approved an Ethereum-based real estate bond for security issuance firm Fundament Group.
The German Central Bank also noted in a recent statement that the potential benefits of Facebook’s Libra should not be suppressed despite regulatory uncertainty and potential risks.