• P Xenos and M Bacina

Breakthrough German law allows banks to sell bitcoin in 2020


A local German news outlet, Handelsblatt, has reported that under the new law titled, 'Law Implementing the Amending Directive to the Fourth EU Money Laundering Directive', banking institutions in Germany will very soon be able to provide digital assets to their clients. The bill has already been passed by Bundestag, Germany's federal parliament.


Effective from 1 January 2020, banks will be able to provide their clients crypto investments alongside traditional securities like bonds and stocks with just a "push of a button."


Sven Hildebrandt, the head of the consulting firm DLC has stated that:

Germany is well on its way to becoming a crypto-heaven. The German legislator is playing a pioneering role in the regulation of crypto-truths.

This Bill amends a clause in the European Union’s Fourth Anti-Money Laundering Directive that currently prohibits banks from dealing directly in cryptocurrency. The new Bill now allows banks to legally sell and store cryptocurrencies, just as they do stocks and bonds, to retail as well as institutional investors. 


Hildebrandt also stated that:

At the same time, exchanges such as Binance and Kraken, and other digital asset custodians, will need to obtain a license from the German regulator, Bafin, if they wish to continue operating in Germany.

In order to apply for this, companies will need a German legal entity with two directors operating in the country by the end of 2019. They will also need to signal their intention to apply to Bafin for a license before 31 March 2020, and submit the application prior to 31 November 2020.


Digital asset custodians who have not established a legal identity in Germany before the end of the year will be operating illegal by 2 January 2020.


Companies wishing to continue to provide services in Germany now have three options:

  1. set up a German company before the end of this year, and then apply for a licence;

  2. work with a cryptocurrency custodian who is licensed in Germany,

  3. work with a licence provider, which can offer a “complex but clever" solution.

Companies have already begun to act on the new German law. Crypto Storage, a subsidiary of Swiss financial services provider, Crypto Finance announced plans to open an office in Frankfurt. 


Hildebrandt said that the new law will be a major breakthrough, stating that:

I believe that this will act as a role model for all the other laws that will be coming into force Europe wide. Germany is driving crypto adoption forward and wants to play a leading role in Europe as well.

Although exciting news for German crypto adoption, it has not escaped the concern of some German industry experts skeptical with the strength of consumer protection under the new law. Handelsblatt cited German financial expert Niels Nauhauser, who stated that consumers may be allured by banks to invest in cryptocurrencies without understanding their risks and consequently losing their investments.

Given the risk of debanking of cryptocurrency companies in years past, this law is a very positive movement towards embracing digital assets and enabling banks to use their trusted position in society to help introduce more investors to these products.

© Michael Bacina. All rights reserved

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