The German language financial watchdog (BaFin) issued a new summary leaflet detailing how cryptocurrencies are treated under newly enacted laws for 2022. The instructions are presented as BaFin's interpretation of the new German legislature.

The March 2 leaflet "specifies the new regulatory standards" that businesses volition demand to adhere to should they wish to provide crypto custody services. This is understood as a generic term to include all businesses that agree crypto for clients, including exchanges, financial services or banks.

The new crypto regulation introduced on Jan. 1, 2022 was part of a wider initiative to marshal German language police force with the European Union'due south Fifth Anti Coin Laundering Directive (5AMLD). Businesses dealing with cryptocurrencies are now considered financial services providers under Germany's Banking Deed, and are required to obtain BaFin's authority.

Highlights from the paper

The instructions analyze several aspects of crypto regulation that were previously left undefined. As cryptocurrencies were not considered units of business relationship under previous definitions, businesses dealing with crypto were not considered as financial service providers.

BaFin thus created a broader definition of a crypto asset, which as well clarifies the departure between tokens used for payment and exchange, and security tokens.

The newspaper noted that security tokens are not considered equally securities within the High german Securities Eolith Deed. However, if they are transferable and tradable, they are regulated by Eu Prospectus Regulation on the thing.

Storage of security tokens is still a nuanced issue, as businesses not licensed to store generic securities may exist able to do and then for security tokens, under specific circumstances.

The regulator likewise clarified who is able to store cryptocurrencies, providing a very generic definition that could be practical to most businesses. The paper explains who can obtain the BaFin authorization:

"Anyone who wants to conduct banking business or provide fiscal services in Germany on a professional footing or to an extent that requires a business organisation operation ready in a commercial manner."