- Companies increasingly adopting blockchain technology while new legislation further propelling the demand
Crypto virus has spread all over the world and with prices yet again gaining steam, everyone wants a piece of them, even banks.
German Federal Financial Supervisory Authority (BaFin), the financial regulatory authority of Germany has already received over 40 requests from banks asking for permission to operate crypto custody businesses, reported local news outlet, Handelsblatt. FDP Bundestagsabgeordnete Frank Schäffler said,
“The market is growing faster than the Federal Ministry of Finance has predicted. That is both a blessing and a curse.”
“The high demand for crypto custody licenses shows that companies are increasingly adopting blockchain technology, but is also the result of the new legislation.”
“Strong Growth” expected
Berlin Solarisbank is one of the first to offer crypto custody which has founded a subsidiary Solaris Digital Assets to store bitcoin and other digital assets on behalf of its customers.
Michael Offermann, the head of crypto banking at the institute says they have been “dealing intensively with the topic of crypto custody for a year and a half.”
The bank has a banking license and expects “strong growth” once it becomes easier to buy and store bitcoin. Its sales potential in the first year has already been in the seven-digit range. He said,
“The new regulation in the new Money Laundering Act is a good time to start practicing. After all, we are not a research institute, but a commercial bank.”
Including cryptos & increased customer protection
The new Money laundering Act that went into effect on January 1st, 2020 no longer allows banks to only offer and keep traditional securities like stocks and bonds. This means, now these banks can offer their customers custody for virtual currencies such as Bitcoin, Ethereum, and XRP.
The new law defines crypto assets as “digital representation of a value” that isn’t issued by a central bank or an official authority. It also doesn’t have the legal status of a currency or money. However, it is accepted as a means of payment or exchange and further used for investment purposes.
This new law also requires crypto custody businesses to obtain a financial supervisory license.
Bafin already considers security tokens as financial instruments and with this new law, consumer protection is also increased as “previous business models that were too lax when identifying customers have to be adjusted or discontinued.”
“We have almost a unique selling point that will help us bring the reputable providers to Germany,” it said.