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  • Scaling Bitcoin via the Lightning Network – What Must be Considered by Crypto Businesses?
    The Lightning Network promises to solve one of Bitcoin´s biggest problems: The Scalability. Due to its decentralized operation mode, the Bitcoin network itself can process and settle between seven and twelve transactions per second. In part this is due to the relatively small block size of just one Megabyte per block in comparison to other […]
  • Capital Markets Union and Security Token – Which Country Should Be Chosen for a Security Token Offering?
    The European commission intends to further develop and promote the free flow of capital within the Capital Markets Union. Numerus efforts have been made – and some have even been partially implemented – to reach this goal since 2015. The EU Prospectus regulation for example creates a uniform European framework for the creation and approval […]
  • Administration of Crypto Assets – What is Regulated by this Variant of the Crypto Custody Business?
    The custody of crypto assets in Germany is an activity which is subject to authorization since the beginning of the year 2020. Rumors have it, that over 40 companies are interested in obtaining an authorization from BaFin to conduct crypto custody business in Germany. The newly introduced legal basis is not only applicable to the […]
  • Crypto Custodians and AML – What Applies to Crypto Custodians?
    Last week BaFin published its long-awaited article concerning the AML obligations of financial service providers that intend to offer crypto custody services. The subject of crypto custody services therefore stays highly topical even during the corona crisis and BaFin continues its efforts to best inform the market participants with regards to the supervisory obligations of […]
  • General Duties of Care in Crypto Business – What Applies to Financial Service Providers Dealing with Crypto Assets?
    When it comes to providing their services to customers, financial service providers have traditionally been strictly regulated. Since the implementation of the second European Markets in Financial Instruments Directive (MiFID II) in 2018, the obligations of securities service providers became even more extensive. In Germany, the federal Securities Trading Act (WpHG) regulates how securities service […]
  • Promoting the Token Sale – When Can Marketing Activities Begin?
    Security token offerings are more and more regarded as an interesting alternative to traditional issuances of securities by companies. But the success at the digital capital markets is follows the same rules as their traditional counterparts and will be rated by the placement success of the security tokens. This means that a company seeking fresh […]
  • Brokerage of Crypto Assets – What are the regulated activities?
    The brokerage of the supply and demand of blockchain tokens in Germany in most cases requires that the acting intermediary obtains a prior authorization by BaFin. This has been the case even prior to the introduction of crypto assets as a new form of financial instrument at the beginning of 2020. The obligation to obtain […]
  • Chinas Blockchain-Based Renminbi as the First National Cryptocurrency
    Last week, China surprised the rest of the world with the issuance of a digital Renminbi. By doing so, the Chinese government became the first mover on the road to a digital central bank currency (CBDC) in form of blockchain-based units of national currency. Even though the project right now is limited to parts of […]
  • Tokenized Convertible Bonds – A Compromise on the Road to Equity Tokens?
    The interest in token-based capital markets issuances increases notably. Not only blockchain startups and tech companies, but also well-established businesses with more traditional business models increasingly consider this new and innovative means of refinancing through the tokenized capital markets. So far, German businesses limit themselves to the issuance of tokenized, subordinated participation rights, but it […]
  • The Authorization Process for Crypto Custodians – The New BaFin Guidelines
    Companies that offer their customers the storage of crypto assets and/or private keys that are used for the transfer of crypto assets had to notify BaFin of their intention to apply for authorization as a crypto custodian until the 31st of March 2020. Companies that used this option are now obliged to submit a complete […]
  • Digitalization and COVID-19 – Temporary Simplifications for German Stock Companies
    Digitalization was on the rise even prior to the SARS-CoV-2 outbreak but the German legislator so far struggled to introduce the legal framework that was necessary to foster the further development of digitalization. With the outbreak of COVID-19 into a world-wide respiratory pandemic and the subsequent pressure on the German economy, the German legislator thankfully […]
  • Business Models with Crypto Assets – What is the Correct Legal Basis for the BaFin Application?
    In Germany, business models that are based on cryptocurrencies require prior approval by BaFin if their activity qualifies as a banking business or a financial service. This was already the case prior to the introduction of crypto assets as financial instruments into the German Banking Act (KWG) at the beginning of this year. BaFin qualifies […]
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