BaFin notified that crypto custody business has been included into the German Banking Act (KWG) as a new financial service. The law implementing the amendment directive to the fourth EU money laundering directive (Federal Law Gazette I of December 19, 2019, p. 2602) included the crypto custody business as a new financial service in KWG. Companies that want to provide these services require permission from BaFin when the law comes into effect on January 01, 2020. BaFin is providing information on the possibility of a non-binding expression of interest as well as on the binding notification of intent according to the German Banking Act.
Even before the law came into force, BaFin had already asked to express informal and non-binding expressions of interest from companies that conduct the crypto custody business and these companies were, therefore, subject to a license requirement on the basis of the new law. These companies are still encouraged to submit such expressions of interest. The voluntary expression of interest does not replace the formal notification of intent pursuant to "Section 64y KWG."
For a company that becomes a financial services institution as of January 01, 2020, the license for the operation of crypto custody business is provisionally granted if the company submits a complete license application by November 30, 2020 and if it notifies BaFin in writing by March 31, 2020 of the intent to submit a license application. A corresponding regulation exists for companies that require a license due to the extension of the term financial instrument in the sense of "§ 1 paragraph 11 KWG by crypto values on January 01, 2020."
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Keywords: Europe, Germany, Banking, Securities, Cryptocurrency, Crypto Custody Business, Financial Services, Money Laundering, German Banking Act, Fintech, BaFin
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