2023-3-21 12:55 |
As cryptocurrencies see fresh market impetus in the wake of latest crisis in the finance and banking industry, one of the countries already on the path to greater crypto adoption is Germany. A recent report showed nearly 50% of investors in the country have considered crypto as an investment option. Indeed, some of the top crypto exchanges are regulated in the country.
Like many other countries, Germany is cognizant of what growth in the cryptocurrency market means and the important role of regulatory oversight. The goal, as with other regulatory efforts, is to ensure that the crypto market operates in a transparent and secure manner.
In this article, we explore who regulates cryptocurrency in Germany and what actions have been taken so far.
BaFin as the regulatory bodyThe Federal Financial Supervisory Authority (BaFin) is the regulatory body that oversees cryptocurrency activities in Germany. BaFin is an independent federal agency responsible for regulating banks, insurance companies, financial service providers, and securities trading in Germany. It was established in 2002 and has its headquarters in Bonn and Frankfurt.
Who is affected?In 2019, BaFin issued guidance on the regulatory treatment of cryptocurrencies. The guidance stated that cryptocurrencies are financial instruments under the KWG and must comply with its provisions. Therefore, any company that provides cryptocurrency-related services, such as trading platforms and wallet providers, must obtain authorization from BaFin.
Crypto has permeated every part of life in Berlin for example, making it clear the necessity for transparent rules. As well as larger companies, a specific example of the use of this currency in day-to-day life would be in the rental industry.
Some landlords will even accept Bitcoin as a way of paying rent, and with the many properties in the capital, that you can check on Rentola for example, it’s easy to see that there can be big money made. The necessity to regulate this becomes apparent.
As well as these previous points, the regulatory body has raised the alarm about the high risks involved in placing money in crypto. This is of course due to the highly speculative nature of them, they continued by insisting on the need to be fully aware of this before considering any investment of any type. As they are not legal tender, is there before means that no government or authority will back them.
What actions have been taken?BaFin has taken several actions to enforce its regulatory oversight of the cryptocurrency market. In 2020, the agency ordered the cessation of activities by a cryptocurrency trading platform that was operating without authorization. BaFin also ordered the liquidation of a cryptocurrency investment company that was not complying with its regulatory requirements and has targeted illegal crypto ATMs.
In addition to BaFin, the central German government has put measures into place to regulate the situation in the cryptocurrency market. In 2020, the government passed the Fifth Anti-Money Laundering Directive (5AMLD), meaning that crypto companies have to register with BaFin and implement anti-money laundering measures. The measure also demands that cryptocurrency companies verify the ID of their clients and always report suspicious transactions to BaFin.
Key takeawayBaFin is the regulatory body that oversees cryptocurrency activities in Germany. The agency has taken big steps in regulating cryptocurrencies and has been bold with its actions to enforce its oversight of the cryptocurrency market. The central German government has also taken steps too, to regulate the market, including passing the 5AMLD and proposing a bill that would allow institutional funds to invest in cryptocurrencies.
The post Cryptocurrency regulation in Germany- what you need know appeared first on Invezz.
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