On November 27, 2019, German local business newspaper the ‘Handselblatt’ reported that as from 2020, it would be legal for German banks to sell cryptocurrencies like Bitcoin and provide custody solutions.
Presently, financial institutions operating in Germany are not allowed to sell cryptos to their clients directly. However, this could change soon, thanks to a planned bill that implements the fourth EU Money Laundering Directive.
The bill already passed Germany’s federal parliament and now awaits the consensus of the 16 states.
The final version of the law recommends that regulated banking institutions be licensed to provide crypto services without relying on 3rd party custodians and special subsidiaries, as it is currently required.
The German crypto community is reportedly pleased with the proposals of the bill. Sven Hildebrandt, head of consulting firm Distributed Ledger Consulting (DLC), remarked:
“Germany is well on its way to becoming a crypto-heaven. The German legislator is playing a pioneering role in the regulation of cryptocurrency.”
The news means that German investors will soon be able to enter the crypto space via domestic funds and hold Bitcoin, Ethereum, and other digital currencies directly in banks.
The new regulation is welcomed by the Association of German Banks (BdB), and they believe that the experience credit institutions have in safekeeping client assets and risk management is vital in preventing money laundering and terrorist financing with crypto assets.
Consumer Experts Worry of Aggressive Selling Tactics
Since Bitcoin and other cryptocurrencies are becoming a hot topic in Germany, some financial experts, particularly Niels Nauhauser of the consumer centre of Baden-Wuerttemberg, worry that this might make banks more aggressive in selling digital assets to clueless investors.
Nauhauser said that German that banks are now targeting new customers using all means, and they might fail at notifying clients on potential risks of investing in cryptocurrencies.
Financial commentator Fabio De Masi shared similar sentiments about consumer protection amid an imminent crypto boom. The economist reiterated that this is something that banks have been waiting for a long time, considering the industry is very lucrative.
He, however, warned that while banks were looking to profit from cryptocurrencies, the financial consumer protection must not be undermined.
Bitcoin on its way into the Mainstream?
By tabling a refined financial bill regarding cryptos, the German Bundestag has taken a significant step in implementing the recently passed ‘fourth Money Laundering Directive’, which is scheduled by the EU to enter into force in 2020.
If the bill passes parliament, it will help promote the spread and acceptance of cryptocurrencies in German society, and in the EU zone as well.
Bitcoin could soon be made available to a more extensive customer base as a speculative instrument, thus competing with shares and securities.