Reading Time: 2 minutes

As reported by Bitcoinist this week, a press release was issued by BaFin, Germany’s Federal Financial Supervisory Authority, on Monday 2 March that marked a significant day in the history of cryptoassets. In the statement, BaFin categorised crypto as the following:

“Digital representation 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.”

According to the regulator, its new classification echoes the guidelines of intergovernmental agencies like the Financial Action Task Force (FATF). The news marks the second landmark crypto classification to emerge in the last few days with an Australian Judge recently ruling that crypto is an investment vehicle — meaning virtual currencies can be used as collateral in the country.

The German regulator’s new crypto classification announcement is also part of the move by the country to adopt the fifth EU Money Laundering Directive (AMLD5) which began on January 1, 2020. Part of the AMLD5 adoption process involves changes to Germany’s Banking Act and Payment Supervision Services Act.

SIGNIFICANT MOVE FOR SOUTH AFRICANS

The South African Reserve Bank has stated in the past that they will take input and follow the lead of established economies in their regulation of cryptoassets, and with such a progressive approach as this by the fourth largest economy in the world is good news for South African crypto enthusiasts. One hopes that the SARB will take heed of this move by BaFin, and that we do indeed see such innovative regulation adopted here at home.

CONCERNING CRYPTOCURRENCY CUSTODY

As part of Germany’s new crypto guidelines, cryptocurrency custodians will need to obtain a license from the regulator to offer their services in the country. Crypto custodial platforms already operating in the country without a license have until the end of November 2020 to apply for one but must show readiness to do so before March 30, 2020.

Such companies already registered in other EU nations cannot “pass port” their operating license to Germany. Instead, such platforms must apply for approval to offer crypto custody services in the country.

Earlier in February 2020, reports emerged that BaFin received crypto custodial licensing applications from no fewer than 40 banks. Apart from banks, the country’s stock exchange is also significantly involved with the crypto economy, with Boerse Stuttgart — Germany’s second-largest stock exchange, recently adding a new inverse Bitcoin Traded Product (ETP – similar to an ETF).

James Preston
James Preston is the Managing Editor of South Africa's first and largest news website for the blockchain industry: SA Crypto. He is a writer and media commentator who has been reporting on how the Tech industry will make the world a better place for 14 years, with a large following on South African radio. He is an early adopter of Bitcoin, and began reporting on its revolutionary capabilities in late 2014. Philosophical by nature, he is intrigued by how the world works, and in turn, how it can be bettered. James believes wholeheartedly that the world can become as close to perfect as we humans can imagine, but it will take a lot of effort (and time) to get there. He believes his life purpose is to inspire people to believe this, and find their place in helping humanity achieve it. James regularly does talks on emerging technology and its impact on society at Universities, global conferences, and events. To invite him to speak at your event, or comment for your media outlet, email info@sacrypto.co.za