- Germany newly passed law set to grandfather an already operating foreign crypto firms despite lacking a license
- However, those foreign firms that haven’t hit the German market yet are to be locked out till they apply for the licenses
Germany’s Financial Supervisory Authority (BaFin) through a memo released in January stipulated that they wouldn’t target firms holding crypto assets for German citizens and were operating without a license. To the contrary they would welcome them to the fold as similar German-based crypto custodians following a new law passed in Germany that took effect beginning of this year.
They must however have declared their willingness to get a license by March 30th and must have completed application of the same license by November 30th. This locks out those firms that hadn’t gotten into the German market yet after the law took effect as they have to acquire a license first if they are to operate there. The memo read,
“Before commencing new activity in relation to crypto values, the company must apply for a license in accordance with section 32 (1) sentences 1 and 2 KWG, also in conjunction with a legal regulation under section 24 (4) KWG”
Germany was prompted to pass the law in accordance to the EU’s Fifth Anti Money Laundering Directive (AMLD5). This meant that the crypto companies were obliged to illustrate compliance in accordance to the KYC and AML protocols.
Uncharted waters for Foreign Crypto firms
This process may baffle those who haven’t crossed paths with the German watchdog as Sven Hildebrandt, head of Distributed Ledger Consulting Group, explained. The laws passed are usually not thoroughly thought through and end with potential loopholes that can only be fixed by establishing administrative routines. He further added that with ample guidance if you had an idea of what you were doing then one ought to know how to go about the task now.
The Hildebrandt’s DLC Group which has been previously sought for advice by foreign crypto firms on how to go about the German regulations is now seeking authority from the German regulator in an attempt to become a compliance wing for companies that may lack financial muscle for the license applications.