- Germany’s approach to cryptocurrencies has raised the question, can Germany agree with cryptos?
- According to Germany’s Federal Financial Supervisory Authority, Binance has violated the securities laws as a result of its stock tokens service
- In March, the Deutsche Bundesbank ran an experiment designed to run a blockchain system without issuing a central bank digital currency (CBDC)
- On the other hand, Germany’s federal parliament has cleared a law that could see approximately 4,000 existing German institutional investment funds invest in Bitcoin
In terms of regulations, Germany is open to Bitcoin. Cryptos are generally considered legal. However, they are taxed differently depending upon whether the authorities are dealing with exchanges, miners, enterprises, or users.
Germany Suspects Crypto Exchange, Binance
Germany’s Federal Financial Supervisory Authority, or BaFin, has stated that it “has reasonable grounds for suspecting” that crypto exchange Binance may violate the country’s securities laws connected with its recently announced stock tokens service.
Recall that Binance recently went live with a tokenized stock trading service. The services, which settle in the form of the exchange’s BUSD stablecoin, opened with automaker Tesla.
After stating that Binance Deutschland GmbH & Co. KG violates the securities laws in Germany, the BaFin did not outline any clear step it would take next. However, the notice outlines the potential punishment for violations of the prospectus rule.
An excerpt of the punishment reads:
... can be punished with a fine of up to 5 million euros or 3 percent of the total turnover of the last financial year according to § 24 Paragraph 6 WpPG. Fines of up to twice the economic benefit derived from the violation can also be imposed,
Germany and Cryptos: Two Unmixing Waters?
While this regulatory guideline stands, the country has not seemed to agree with cryptos. The government seems to want the underlying blockchain technology but has little to do with cryptocurrencies.
The experiment, a transfer and settlement system, was an attempt by the central bank of Germany to merge traditional banking features with emerging blockchain technology. The experiment was a success and could be adopted by other European countries.
On the Flipside
- Regardless of the seeming uncertainty, an Ethereum ETP has been listed in Germany.
- The asset manager, WisdomTree, listed its Ethereum (ETH) exchange-traded product (ETP) today on Deutsche Boerse’s Xetra market in Frankfurt.
- In March, 21Shares and ETC Group both listed Ethereum-backed ETP in Germany.
Germany Wants Cryptos Also
While it may seem absurd to suspect and want something, that is precisely the case here. There is new legislation in Germany that will enable managers of the most popular institutional investment funds, the so-called Spezialfonds, to allocate 20% of them to cryptocurrency assets.
The law set to come into force on July 1 will mean that approximately 4,000 existing German institutional investment funds will become eligible to invest in crypto assets. Although not yet enacted, experts have hailed the move as a significant boost to Germany’s position as a financial investment hub.
Last Thursday, Germany’s federal parliament, the Bundestag, cleared the law; however, it is currently waiting to be rubber-stamped by its Federal Council. When enacted, both existing Spezialfonds and new ones will invest in Bitcoin and other cryptos, joining the growing institutional investors.