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Future Licence Requirement for Crypto Wallet Providers in Germany

 

29 May 2019

On 20 May 2019, the German Federal Ministry of Finance published a draft bill (Referentenentwurf“Draft Bill”) for the implementation of the Fifth Money Laundering Directive (“AMD 5). While most of the Draft Bill is dedicated to amending the German Money Laundering Act (Geldwäschegesetz“GWG”), it also broadens the scope of the licensing requirement under the German Banking Act (Kreditwesengesetz“KWG”) for certain services related to crypto values, thus “gold-plating” AMD 5 which does not contain a licensing requirement: The Draft Bill introduces a new licensable activity, the custody of crypto values (Kryptowerte). Also, by introducing a broad definition of crypto values and qualifying these as “financial instruments” within the meaning of the KWG, arranging and trading activities in cryptoassets will also be subject to licensing requirements if provided in Germany. While such broad definition of financial instruments partly confirms the current view of the regulator, it partly also goes beyond that, in particular as it covers security tokens and investment tokens regardless of whether or not further requirements are met. As a consequence, some firms might have to apply for a licence to the German regulator BaFin by end of 2019.

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