Sun. Aug 7th, 2022

The new German cryptocurrency regulation is now in effect and it has already started attracting institutional investors into the field.

New Regulation Attracting Institutional Investors

The German regulation for cryptocurrencies went into effect earlier this year, and several institutional investors are already declaring interest to enter into the scene. The largest institutional investor to maintain interest in offering cryptocurrency services is Boerse Stuttgart.

The company, which is the second-largest stock exchange in Germany, announced on Tuesday that its cryptocurrency custody arm is getting ready to offer custody services to institutional investors, like Fintech firms, banks, and asset managers. Blocknox is the custody arm of Boerse Stuttgart Digital Ventures and it is in charge of custody of cryptocurrencies on an escrow basis.

According to their announcement, Blocknox has told the supervisory agency that it intends to offer cryptocurrency custody services following the enactment of the cryptocurrency regulation on January 1, 2020.

Blocknox Managing Director,UlliSpankowski, stated that, “We welcome the regulation of crypto custody as a reasonable step towards further professionalization of the industry. Thanks to the new legislation, more institutional players are likely to enter the crypto market.”

Blocknox’s crypto custody service was launched in January of last year. It was first available to users of BISON, a crypto exchange app sponsored by Boerse Stuttgart. However, by September 2019, the services were extended to users of Boerse Stuttgart Digital Exchange (BSDEX), a digital asset trading platform operated by the company.

Boerse Stuttgart has been showing increasing interest in the cryptocurrency sector. In December, it announced a partnership with Japanese financial services giant SBI Holdings as the two seek to expand their cryptocurrency businesses in Asia and Europe. SBI is one of the largest institutional investors offering cryptocurrency services in Japan, including a regulated cryptocurrency exchange.

In terms of direct cryptocurrency purchase, BISON allows its users to buy BTC, ETH, LTC, and XRP using their local currency. However, a German bank is needed before you can purchase the cryptocurrencies from the app. The company recently revealed that it has over 81,000 active users and is looking to support the purchase of Bitcoin Cash (BCH) on its platform.

Germany’s New Crypto Regulation Provides Clarity

Germany implemented the amendment to the Fourth EU Money Laundering Directive on January 1, 2020. The new regulation provided clarity to companies hoping to offer cryptocurrency services in the country and those already offering such services.

According to the amended regulation, financial institutions looking to provide cryptocurrency custody services would need to receive authorization from the Federal Financial Supervisory Authority, also known as BaFin.

BaFin explained that companies already offering crypto custody services prior to the enactment of the new regulation will have to submit an expression of interest in writing before March 31. Meanwhile, banks and other financial institutions that are looking to start offering custody services will have to receive approval from BaFin before they can proceed.

Blocknox maintained that it would submit its final application to BaFin before the deadline. The new regulation has already seen over 40 institutional investors declare interest in offering cryptocurrency custody services.