Since the new German crypto regulation went into effect, financial institutions in Germany have been preparing to offer crypto custody services. Among them is Boerse Stuttgart, the country’s second-largest stock exchange. Having obtained a provisional license from BaFin, the regulator in charge of licensing crypto service providers, Boerse Stuttgart is preparing to offer crypto custody services to institutional investors.
Also read: 40 Banks in Germany Declare Intent to Offer Crypto Services Under New Law
New Regulation Attractive to Institutional Investors
Boerse Stuttgart announced on Tuesday that its crypto custody arm is preparing to offer custody services to institutional clients, such as fintech firms, banks, and asset managers. Blocknox, a subsidiary of Boerse Stuttgart Digital Ventures, takes care of the custody of cryptocurrencies on an escrow basis.
“With regard to the new legal regulation of crypto custody in Germany as of 1 January 2020, Blocknox has already announced its intent to the supervisory authorities to apply for the required license,” Blocknox Managing Director Ulli Spankowski explained, detailing how his company is complying with the new law. “This means the license is deemed to have been granted provisionally,” he elaborated, adding:
We welcome the regulation of crypto custody as a reasonable step towards further professionalisation of the industry. Thanks to the new legislation, more institutional players are likely to enter the crypto market.
Blocknox’s crypto custody service was established at the end of January 2019 for users BISON, a crypto exchange app powered by Boerse Stuttgart. This service was extended at the end of September 2019 for users of Boerse Stuttgart Digital Exchange (BSDEX), the digital asset trading platform of Boerse Stuttgart. While the exchange was launched in September, it opened to all traders across the country in December. Boerse Stuttgart also announced in December that it had partnered with Japanese financial services giant SBI Holdings to expand both companies’ crypto businesses in Asia and Europe. SBI has several crypto operations in Japan, including a regulated crypto exchange.
BISON currently supports the buying and selling of BTC, ETH, LTC, and XRP. A German bank account is needed to use this app. Recently, the company announced the app now has around 81,000 active users and BCH will be added as an additional tradable cryptocurrency in the near future.
Germany’s New Crypto Regulation
The law implementing the amendment to the Fourth EU Money Laundering Directive went into effect in Germany on Jan. 1. It requires financial institutions wanting to offer crypto custody services to obtain authorization from the Federal Financial Supervisory Authority (BaFin).
News.Bitcoin.com reached out to BaFin for more information about the new regulation. The regulator explained that financial institutions with existing crypto custody operations when the new law went into effect must submit in writing by March 31 an “expression of interest” to offer crypto services if they want to continue offering crypto custody services. Banks without an existing crypto custody business when the new law went into effect cannot start offering the services until they have obtained approval from BaFin. According to reports, over 40 financial institutions have already submitted this intent.
Spankowski clarified that “Blocknox will submit the final application by the specified deadline.” BaFin confirmed to news.Bitcoin.com that banks failing to submit an expression of interest by March 31 must cease offering their existing crypto custody services. The expression of interest does not replace the application itself and does not have any bearing on whether the application will be approved. Financial institutions that have submitted an expression of interest must complete an application by Nov. 30 or cease crypto services by that date. BaFin also noted that the length of time it takes to issue a license depends on individual cases. The regulator is still finalizing its administrative practice for the approval and ongoing supervision of new crypto services.
What do you think of more German institutional investors entering the crypto space? Let us know in the comments section below.
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Images courtesy of Shutterstock and Boerse Stuttgart.
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