German Crypto Businesses Will Need a BaFin License In 2020
Europe is taking several steps in order to regulate the crypto market this year. Now, Germany is the latest country to do it. Cryptocurrency companies operating in Germany will need to apply for licenses if they intend to keep working legally in the country next year.
BaFin, an important financial regulator of the country, affirmed that new Anti-Money Laundering (AML) laws are set to come into effect next year because of the Fifth Money Laundering Directive, also known as AMLD 5.
The idea behind AMLD 5 is that crypto assets should be considered financial instruments according to the national laws. Not only cryptos will be affected by the new law but also several security tokens as well.
According to the new legislation, crypto derivatives are not a part of the changes, though. However, it should be noted that they are currently subject the ESMA’s restriction which is in place at the moment, so they are not completely free, too.
The main reason for changing the rules now is because the German government believes that the country currently has the need for the increased oversight over this market as it is growing a lot in recent years.
Another major reason is to be compatible with the current laws of the European Union (EU), too. At the moment, the EU AML laws require these assets to be regulated and to have proper licenses in order to be active in the country.
The AMLD 5 was originally passed around a year ago and it is a law that will cover the whole European Union. The idea is that all the countries which are a part of the EU should be ready to fully implement it until January 2020.
It is important to notice that the directive was the first legislation made by the EU to actually try to regulate the crypto market in a concise manner.
Frank Schaffler, a member of the Free Democratic Party, has commented on the new law, affirming that the attitude is set to hurt innovation and that it may end up forcing crypto businesses outside of the country in case it continues.
Others, such as Christian Schmies, a law of the country, are affirming that the regulation is important because it is set to add more clarity to the laws and help the country to decide better what to do with the local crypto industry.
Exchanges And Wallets Are Set To Have Even Tighter Rules
The new EU directive is set to affect crypto exchanges and wallets even more than other crypto-related businesses. For instance, these companies will have to register all its customers and pass AML laws as well as disclose the ID of the traders when there is any kind of suspicious activity.
This is the first time ever in the continent that crypto exchanges face such a tight regulation in more than one country. However, it seems that the regulation enforced by the EU will be the way to go for now.
Unfortunately, regulation in Europe is far from clear, a problem that occurs around the whole world. Most crypto companies are still trapped in a sea of uncertain regulation. Even that many people in the crypto industry dislike regulation, it is important to steer away from the constant doubts that are caused when the regulation is not clear enough.
Several other countries such as the United Kingdom and Australia are considering following new legislation in order to regulate Bitcoin and the other cryptos. However, the problem that the world is not fully in synch with crypto persists.
While countries such as Japan are very welcoming to cryptos, the United States is considerably more cautious and some other important players such as China and India are banning it.