Crypto Custodian License Requests Are On the Rise In Germany; Banks Are Still Hesitant
- There have been anti-crypto sentiments around German Banks according to Stijn Vander Straeten CEO of Swiss-based custodian Crypto Storage AG, a subsidiary of Crypto Finance AG.
- He believes that German Bankers tend to avoid risk with Crypto Firms not generating any income by simply opening accounts.
They faced the problem first hand in November 2019 as Crypto Storage AG was opening a Deutsch branch, Crypto Storage Deutschland in Frankfurt, for the firm. The strategic move would grant them access to the German Market after they had completed license applications. They were however turned down by the first 15 banks they visited and their current banking partner needed loads of convincing from Sven Hildebrandt an industry expert in Germany.
Reports have surfaced that Crypto Storage AG will indeed leverage their unique position to provide a white-labeled solution. This would be offered to crypto startups and institutions that want to offer custodial services in Germany without necessarily opening a brick and mortar premise in Germany. The Service is said to cost an excess of 2 million euros.
However, Matthias Winter of Eversheds Sutherland Germany was opined that the German Bankers were less inclined to facilitate crypto firms as they were still skeptical rather than the legal repercussions.
BaFin Tough Stance On Crypto Space
Notably, the country’s financial watchdog BaFin has offered some clarification as there were concerns over what services would really be classified as Crypto Custody. They released guidelines that clearly stipulated the process of license application. BaFin also highlighted that a crypto firm would be considered a custodian if it has privileged access to private keys.
“The legal facts of the crypto custody transaction are fulfilled by who: Crypto values or private cryptographic keys that are used to hold, store or transfer crypto values”
They have also recently released specific guidelines touching on IT and InfoSec including describing a monitoring process they had implemented for their services. They also had outlined the requirements of the managing directors of the respective firms. There is also mention of a EUR 10,750 fee to grant of authorization once the application sails through.