Today, Bitkom published an information paper on the regulatory requirements for the licensing process for commercial custody of cryptocurrencies and cryptotokens on behalf of customers. The background is a new regulation since the beginning of the year, according to which so-called crypto custodians of Bitcoin, Ripple, Litecoin or IOTA are considered financial service providers and need a license from the German Federal Financial Supervisory Authority (BaFin).
The paper provides the following details:
Requirements and evidence to be provided for the professional eligibility, reliability and availability of the crypto managing directors,
special rules, that apply to the initial capital and when, for example, a higher initial capital than 125,000 euros is required and
contents of a risk strategy, which form the basis for a crypto license to be granted and crypto-specific risks – such as the loss of a 'private key' used to encrypt messages and transactions on the Internet.
Patrick Hansen, Blockchain Divisional Manager at Bitkom, said: "Bitkom welcomes the fact that crypto custody is now a financial service subject to authorization in Germany. In the future, this will significantly simplify cooperation between crypto custodians and established financial service providers such as banks, asset managers or pension funds. Regulation in this case is a game-changer that can help digital assets achieve a breakthrough."