Crypto Securities Register

Crypto Securities Register must be Operated by Service Providers with BaFin License

In a crypto securities register, issuers of crypto securities must publish the key data on their issuance such as the essential content of the right associated with the crypto securities and the nominal amount, the issue volume, the holder and any restrictions on disposal. In this context, the operation of the crypto securities register is a financial service requiring a license and can only be provided by a specialized service provider holding a BaFin license for crypto securities register operation. Issuers of crypto securities must therefore mandatorily appoint a crypto securities registrar to operate the crypto securities register. If a crypto securities registrar is not appointed, the issuer of the crypto securities itself is deemed to be the entity keeping the register. Crypto securities registrars are only required for issuances of crypto securities under the German Electronic Securities Act (eWpG). In contrast, no crypto securities registry is required for issues of tokenized securities (security tokens) that are not subject to the eWpG.

Requirements for the BaFin License for Crypto Securities Registrars

Crypto securities registrars are financial institutions under German regulatory law and must therefore successfully apply for a BaFin license prior to commencing their business activities. The granting of the license requires the fulfillment of numerous legal obligations. For example, crypto securities registrars must always maintain a minimum regulatory capital of EUR 150,000 which must be available either as a deposit on demand with a bank in the European Economic Area (EEA) or in the form of certain assets that can immediately be liquidated. The directors of a crypto securities registrar must be fit and proper and reliable professionals. In addition, the company must be able to provide a proper business organization, in particular with regard to risk management, IT security and compliance organization. The shareholders of a company offering crypto securities registry services must also be reliable. The preparation of a license application for a BaFin license for crypto securities registry services is a very elaborate and complex project that should be accompanied by a specialized law firm. If a company meets all regulatory requirements, BaFin will grant the license for crypto securities registry services.

How Long Does a BaFin Licensing Procedure for Crypto Securities Register Take?

BaFin approval procedures generally take between six and twelve months. Depending on the individual case, however, the licensing procedure may take less or more time. Well-prepared applications for licenses, accompanied by an experienced lawyer, are usually decided faster than self-prepared applications, since BaFin often asks numerous questions and must request missing information and verifications. In the case of crypto securities registry, there is also the fact that it is a very specialized financial service in an innovative market segment. A careful and clear design of the application for a license with the help of a specialized law firm is therefore particularly important to enable quick processing by BaFin.

The competent lawyer for questions regarding Crypto Securities Registers in our law firm is Attorney Lutz Auffenberg, LL.M (London).