Government officials in Germany confirm that several banks have filed a request to launch a digital asset custody business.
BaFin, the nation’s financial regulator, says it has received over 40 applications from parties interested in offering cryptocurrency custody services, reports news outlet Handelsblatt.
Germany’s updated Money Laundering Act permits banks and other local financial institutions to provide and manage traditional securities, including stocks and bonds, along with digital assets, including Bitcoin (BTC), Ether (ETH), and XRP.
Digital currencies have become increasingly popular during the past few years. As the market capitalization of crypto assets continues to grow, climbing to $288.3 billion, BaFin is addressing the issue of anonymity and the exploitation of these emerging assets by criminals, money launderers and international terrorists. The regulator is warning firms that new laws require businesses to have an operational license if they want to offer custody services.
German authorities formulated the new regulations after the European Union introduced its fifth anti-money laundering directive (AMLD5) which requires crypto-related companies to ensure that their operations comply with updated know-your-customer and AML processes.
FDP -Bundestagsabgeordnete Frank Schäffler tells Handelsblatt,
“The market is growing faster than the Federal Ministry of Finance has predicted. That is both a blessing and a curse. The high demand for crypto custody licenses shows that companies are increasingly adopting blockchain technology, and this is also the result of the new legislation.”
BaFin has set a November 2020 deadline for such firms to establish compliance procedures for storing crypto assets or conducting any other kind of business that deals with digital assets.