Under a law going into effect Jan. 1 requiring digital asset custodians to be licensed, each company that currently custodies crypto and targets German clients must announce to Germany’s Financial Supervisory Authority (BaFin) its intention to urge a license before April 1 and submit an application by Nov. 30.
A clause allows current crypto custodians to stay serving German customers without being penalized if they declare their intent to use , but those self same companies are waiting on BaFin to release final regulations round the law.
“As long because the legislation isn’t in situ , BaFin isn’t getting to believe the way to cope or the way to affect the legislation,” said BaFin press officer Norbert Pieper. The regulator declined further comment and Germany’s Federal Ministry of Finance didn’t answer request for comment by press time.
Pieper added: “There is not any date foreseeable [yet] by which we’ll be ready to communicate the results of our assessment. we’ll certainly communicate that on our website.”
While the ultimate regulations haven’t been set yet, the new license requirement might not produce an equivalent quite exodus of crypto firms that ny saw after the BitLicense requirement, said Miha Grčar, head of business development at Bitstamp.
London-based Bitstamp, one among Europe’s largest crypto exchanges, plans to continue operating in Germany but declined to mention whether it might apply for a license, said Grčar. Crypto firms could also use a white-labeled custody service to work in Germany.
Because the law is an “updated version of the prevailing banking regulation,” banks will likely have the foremost to realize from it, Grčar added. Companies that get the license are going to be German financial institutions, but not classified as banks.
The law also means German regulators now see crypto as a “legitimate” industry, he said.
Ulli Spankowski, chief digital officer and director of the crypto custody subsidiary of German stock market Boerse Stuttgart, called Blocknox, sees the license as a breakthrough for “the professionalism of the industry.” The subsidiary has already advised BaFin that it plans to use .
“There are other countries that won’t choose a full-fledged license,” he said. “If you would like to urge traditional, established players from the banking side, you would like to offer them this environment to feel safe.”
DLC group is taking advantage of the new regulatory framework by offering consulting services for firms curious about applying, and its own white-labeled crypto custody service.
Sven Hildebrandt, head of Distributed Ledger Consulting Group, cares some exchanges won’t understand the nuances of the new law.
“The law is merely in German and no English translation of the law is out there,” he said. “What’s getting to happen to exchanges? [Operating without a licence] is really a felony and not a misdemeanor so that’s jail time.”
Hildebrandt predicts the prices of licensing are going to be almost like other German financial services licenses where firms will need two managing directors, a longtime German entity and 125,000 euros of starting capital. He also estimates installation will cost 250,000 to 350,000 euros and recurring yearly costs are going to be 350,000 euros.
Switzerland-based Crypto Storage AG, a subsidiary of Crypto Finance AG, is opening a branch in Germany to supply crypto custody to banks then financial technology startups.
“Large banking houses will do custody business within the future,” Stijn Vander Straeten, CEO of Crypto Storage AG, said. “They are moving slowly, though. We’ll build it up now for a premium.”
Berlin-based solarisBank this month opened a subsidiary called solaris Digital Assets to supply crypto custody as a service. So far, the bank features a few customers testing the service with quite 40 companies within the pipeline, said Alexis Hamel, director of solaris Digital Assets.
In addition to expecting details from BaFin, crypto firms also are waiting to ascertain if the law are often passported to other European Union states.
“Germany is certainly at the forefront with the clearer regulation,” Hamel said. “We still got to see how other European countries level up.”
Correction (Feb. 5, 2020, 19:24 UTC): An earlier version of this story listed Nov. 1 because the deadline for crypto firms to use for a BaFin custody license. the particular deadline is Nov. 30.