Blog

  • Let’s Build a Crypto Custodian (Part II) – How Much Regulatory Starting Capital Does a Crypto Custodian Require?
    As of the first of January 2020, crypto custodian services will be regulated as a new financial service in Germany. The safekeeping of cryptocurrencies and crypto tokens for customers on a commercial extent will at that point in time require a prior authorization by BaFin. The new financial service touches on a core issue of […]
  • Starting Capital and Equity for Blockchain Startups – How Much must be shown to BaFin?
    Operating a business model in Germany that is based on or related to cryptocurrencies requires a BaFin authorization in most cases. BaFin qualifies Bitcoin and comparable cryptocurrencies as units of account already since 2011 and as of 2020 crypto assets will be legally classified as financial instruments in the German Banking Act (KWG). Moreover, BaFin […]
  • Let´s Build a Crypto Custody (Part I) – What Qualification is Required by the Management?
    After a lengthy back and forth, the German legislator last week finally decided on how to conduct the transposition of the provisions of the 5th European AML Directive into national law. The German Parliament accepted the recommended resolution of the 7th financial committee after the original draft of the federal government was heavily criticized by […]
  • Lending Cryptocurrencies – Is that a Lending Business and Therefore Subject to Authorization?
    Companies that commercially grant customers loans generally need, if they are subject to German banking supervisory law, a BaFin authorization for the lending business. According to the applicable legal provisions, this banking activity is reserved for companies with a full banking license. According to the legal definition of the German Banking Act (KWG), acceptance credits […]
  • Passporting an STO Prospectus – How Can an STO Prospectus be Used for EEA-wide Offerings?
    Numerous capital markets authorities throughout Europe approved security token offerings by now and thereby allowed the public offering of blockchain-based securities. Even in Germany, where the securities law still heavily relies on documents in paper form, a number of securities prospectuses regarding blockchain-based securities have been approved by BaFin. At the same time, the German […]
  • Crypto Information Services – Is That Subject to Authorization in Germany?
    The trading of cryptocurrencies grew more and more complex over the past ten years. Nowadays, investors do not only have the option to directly sell and acquire Bitcoins but instead they can also hold long or short positions of Bitcoin. These derivative transactions allow them to bet on rising or falling prices without ever acquiring […]
  • Multisig Wallets and Crypto Custody – What is Regulated Under the New Law?
    After the highly anticipated debate in the German Bundestag regarding the transposition of the provisions of the fifth European AML Directive only marginally included a discussion of the introduction of crypto custody services as a new financial service, it is still not foreseeable if the proposed draft, prior to the final vote will be revised […]
  • Let´s Sell a Security Token – Who is Actually Allowed to Sell Tokenized Financial Instruments?
    In 2019 BaFin allowed the first security token offerings in Germany and approved the corresponding and necessary security prospectuses. Blockchain-based capital markets issuances are therefore possible in Germany and a viable alternative for issuers seeking to acquire capital. However, the approval of the necessary prospectus is just the first step to a successful emission. The […]
  • Let’s Create a Stablecoin – Can Politics Prohibit Libra?
    In the last couple of weeks, the pressure on Facebooks stablecoin project Libra intensified. Government representatives like the German minister of finance Olaf Scholz and his French counterpart Bruno LeMaire see numerous problems and fear systemic risks if private companies offer their own means of payment as an alternative to national currencies. They therefore threaten […]
  • Credit Cards and Crypto Business – Crypto Companies as High-Risk Merchants
    The vast majority of goods and services that are purchased online is still paid for via credit card. This also applies companies from the blockchain industry since cryptocurrencies as a means of payment, even in this field of business, have not yet reached mass adoption. It is therefore crucial for e.g. crypto exchanges, token emitters […]
  • Introducing Digital Securities – What are the Implications for Security Token Offerings?
    The German Federal Government resolved its blockchain-strategy on 18th September 2019. The resolved version includes 44 specific measures not only concerning initiatives that are related to capital and financial markets but also the promotion of blockchain projects that have an impact on the real economy, as well as research, cooperation initiatives and the implementation of the technology […]
  • Spot on Crypto Payment Providers – How is that Regulated?
    Next to crypto exchanges and Bitcoin ATMs, crypto payment service providers were one of the business models of the Blockchain community from the very get-go. The user of these services can transfer Bitcoin to the service provider which will in return transfer the equivalent in e.g. Dollar or Euro to a bank account of the […]
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