A new Anti-Money Laundering (AML) regulations will come into effect in Germany starting from next year. According to a Cointelegraph report on July 24, the regulation demands all cryptocurrency businesses to hold a Federal Financial Supervisory Authority (BaFin)-issued license.
What Does This Mean for the Industry?
Crypto assets will be considered a financial instrument from 2020 so new regulations are there to ensure cryptocurrency-related businesses such as exchanges and wallet providers are licensed by BaFin and comply with AML regulation. However, few have remained skeptical about this decision as they think the government is scaring away innovation and forcing crypto businesses to move to other EU states, according to local media FAZ.
Enhanced Clarity or Reduced Innovation?
Christian Schmied, the partner of the law firm Hengeler Mueller, welcomed the regulation adding that it brings the much-needed clarity that will allow for positive growth in the industry. He said,
“The technology has not yet been accepted by institutional investors because a reliable legal framework is missing.”
While Schmied considers the label of a financial instrument to be a step in the right direction also states the importance of clarity.
Cointelegraph reported that BaFin recently approved an Ethereum-based real estate bond for the Fundament Group, a security issuance firm.
According to a recently released statement from the German Central Bank, the expected benefits of Facebook’s Libra should remain regardless of the regulatory uncertainty and potential risks.