Germany to make BaFin license mandatory for crypto transactions
July 27, 2019 12:30 pm,
Cryptocurrency is going through a rough patch right now. There is a wave of change going on, and it’s a make it or break it moment for the millennial concept. The latest news regarding cryptocurrency is from Germany, where the transactions and other exchange in connection with cryptocurrency will need a specific license Bafin, for its legal occurrence. Even though this does not create a large scale impact on the cryptocurrency as a whole, the German startups and angel investors will have a certain impact. Small changes such as these are taking place all over the globe and the root cause of all the changes in the underlying fact that cryptocurrency lacks security.
The German government has asked all the cryptocurrency-related businesses to have a compulsory BaFin license by January 1, 2020. The crypto businesses, such as the exchange websites and hot wallets and cold storages must follow the Anti Money Laundering regulations. There are certain rules and regulations listed out by the AML, the most important one among which is that the business must possess the BaFin license. The license will be issued by the Federal Finance Supervisory Authority and is given ample value by the German government. This is the common and recent trend that is seen in the various nations as they either ban or accept cryptocurrency.
Reason for changes
The main and transparent reason for the sudden change in the regulations is because of the reason that from the beginning of the year 2020, all the assets associated with cryptocurrency will be regarded as a financial instrument of the nation. This is a huge title for cryptocurrency since being considered as a proper financial instrument is almost one step closer to being considered as legal tender.
Germany has not been much of a friendly nation when it comes to startups, but they have been very much welcome in the case of cryptocurrency. Ever since the announcement of Libra by Facebook, the attention of the whole world has shifted to the crypto world and its functioning.
There have been many discussions regarding the impact of the new rule on the investments and transactions including cryptocurrency in Germany. There is a group of people who believe that this may lead to stagnation in the growth of cryptocurrency. This is because additional rules and regulations might slow down the process and may deflect the angel investors. Again, there is another group of people who consider it a good chance. Adding regulations add extra clarity to the digital realm, which in turn, will lead to additional growth. They say that it is due to the lack of transparent and a lower degree of the legal framework that investors from proper firms don’t dare to make huge investments on crypto business.