Germany has a very diverse and dynamic ecosystem of companies and enthusiasts, especially in Berlin. The federal government itself has taken an important step in developing this ecosystem, which is trying to preserve and enhance the dynamic blockchain ecosystem to continue its growth and make Germany an attractive investment opportunity in this field.
Comprehensive and reliable organization
To achieve this goal, the German government adopted a national blockchain strategy in September 2019 to support its commitment to using technology. It contains 44 individual actions to be implemented by the end of 2021 by a total of 10 federal ministries. Exactly one year later, in September 2020, 17 measures were already very advanced, 20 were still in progress, and with seven measures nothing had happened yet – according to an estimate published by Bitkom, the German Federal Information Technology Association.
Germany’s implementation of this blockchain strategy in 2020, as well as the implementation of the fourth European Union directive against money laundering, had far-reaching implications for emerging blockchain companies, fintech companies, banks, digital currency exchanges, and industrial companies. Starting January 1, 2020, owning a crypto asset – and thus trading with it – requires a license from the nation’s federal financial regulator, known as BaFin. This license applies to all companies that own or trade in cryptocurrency assets such as Bitcoin (BTC) and Ether (ETH), from cryptocurrency providers to cryptocurrency exchanges. Starting in 2020, processing crypto assets in Germany is subject to high legal requirements and standards that have been in place in traditional capital markets for decades.
One of the most important regulatory actions in 2020 was the Electronic Securities Issuance Act, which was approved by the Federal Cabinet in December. According to this law, futures securities can also be issued exclusively in Germany in electronic form.
Another important step towards regulation was the submission by the European Commission of the legislative proposals for cryptocurrencies in September 2020. The Crypto Asset Markets Regulation, known as MiCA, is expected to go into effect in 2022 and provides legal clarity and security to crypto asset exporters and suppliers across the European Union. .
Right now – and until MiCA goes into effect – companies often have to adapt their international business model to individual EU countries, which can lead to higher costs. Some pan-European regulations such as MiCA regulations can reduce complexity and uncertainty for crypto service providers and improve conditions for market participants.
This comprehensive regulation can be a huge challenge for startups, but it also provides opportunities when it comes to professionalizing the entire coding ecosystem. Those who think regulation is a kind of “stop sign” for cryptocurrencies, cryptocurrencies and cryptocurrency exchanges are wrong. Instead, the organizational structure in Germany is designed to bring cryptocurrencies on par with current financial products. As a result, unprofessional startups and questionable suppliers may be expelled from the German market. Startups of good standing can find solutions and keep growing.
The growth of financial services in the crypto sector
First and foremost, the new rules make it easier to invest in cryptocurrencies, ushering in a financial services boom year. Many companies and banks have created the technological infrastructure suitable for professional trading in Bitcoin and other cryptocurrency activities.
This has led to an increase and diversification of offerings for digital assets in 2020. Financial services in the cryptocurrency sector include, for example, tools that track the price of bitcoin or markets for retail investors. Fully regulated markets are now appearing for professional investors, such as the Boerse Stuttgart Digital Exchange and Bankhaus Scheich. Some banks have also established themselves as server-as-a-service platforms. For example, Solarisbank and Bankhaus von der Heydt provide other financial institutions with the regulatory and technological infrastructure to provide customers with access to cryptocurrencies.
Ten31 Bank, a subsidiary of the fully regulated German bank WEG, has been processing payments between digital currencies and the euro since May 2020.
At the end of 2020, Bank Hauck & Aufhauser also launched its service as a cryptocurrency and digital asset manager.
Some fintech ventures, such as Bison and Startup Bitwala, target private investors and allow you to trade cryptocurrencies around the clock.