NAnd so also the savings banks: the securities company of the red group has applied for a license with Deka-Bank in order to store digital assets in future. Such licenses are issued by the Federal Financial Supervisory Authority (Bafin) and are required to store and trade digital currencies and other assets that can be mapped on a blockchain for customers.
Since January 1, 2020, you need a permit to do business with digital currencies. Operating regulated financial services without the proper license is a criminal offense punishable by up to five years in prison. However, the law also provided for generous transitional provisions for companies that had already carried out corresponding transactions before the corresponding directive came into force. For a long time, the companies that traded Bitcoin, Ethereum and the like operated in a kind of legal gray area.
Some companies already have licenses
One of the first companies to be granted such a license was the American listed company Coinbase – one of the largest marketplaces for trading digital currencies. This also officially allowed Coinbase to hold, store and transfer crypto assets and private cryptographic keys. Hauck Aufhäuser Lampe via the acquired fintech Kapilendo and the Munich fintech Tangany have also had a license as a crypto custodian for some time. Bitpanda and Upvest have been added in recent months.
Such a crypto custody license is good news for customers, because they can then be sure that their possible deposits are actually safe there according to the standards of the financial regulators. Again and again there are black sheep who take advantage of the unregulated market: Bitcoin worth billions have been stolen in recent years or have simply disappeared.
Supposedly large exchanges like Binance recently have a trading ban in other countries, others have long since gone bankrupt. Basically, the following applies in the crypto industry: not your keys, not your coins – i.e. if you do not have access to the wallet with a private key, the digital coins theoretically belong to whoever has the key. This is another reason why such crypto custody licenses are important.
There are some applications
But the mills of the overseers grind very slowly. In June 2021 there were 26 permit applications awaiting approval, in April 2022 there were still 25 applications awaiting approval. A low double-digit number of license applications for the crypto custody business is currently pending, a spokesman told the FAZ: “Despite the significantly more difficult market environment, several new applications were made in 2022. In return, providers also took back license applications, and in one case Bafin issued a refusal that became final,” said the Bafin spokesman. Despite the significantly more difficult market environment, several new applications were made in 2022. In return, providers also took back license applications, and in one case the BaFin issued a refusal that became final. The Bafin supervisory authority says, among other things: “In the majority of cases, the authorization documents are incomplete in the authorization process for the crypto custody business, so that we sometimes have to request multiple information and documents,” said the spokesman.
