New German Law Might Allow Banks to Store, Trade Crypto
Germany’s federal parliament Bundestag has reportedly passed a bill that is to allow the country's banks to store and sell cryptocurrencies next year. However, the legislation is awaiting the approval of the Bundesrat, the parliament’s chamber that represents Germany’s 16 federal states.
The latest development comes as Germany’s banking sector reported a 31% decrease in profits last year, and analysts from the Moody’s credit rating agency are expecting German banks’ profitability to further drop as net interest income falls, as reported by the Financial Times.
Meanwhile, the final version of the bill goes well beyond the initial draft, reported major German business daily Handelsblatt. Should it be implemented in its current form, the legislation will not require banks to use the services of external custodians or special subsidiaries to store cryptocurrencies, but they will be able to provide their own storage capacities.
The bill fuels optimism amid some crypto industry representatives. Sven Hildebrandt, Partner for Corporate and Business Development at local firm Distributed Ledger Consulting, said the legislation could make Germany a “crypto-heaven”, and the German lawmakers are “playing a pioneering role” in the field of crypto regulation.
In contrast, critical voices from some public authorities and political parties point to the additional risks that should be mitigated by German banks before they offer crypto to customers.
Niels Nauhauser, a financial expert at a consumer consulting organization in Baden-Württemberg, a state in southwest Germany, said that, contrary to special bond offerings in which banks are required to inform their customers on related costs and provide them with key investor information, this is not the case in direct sales of cryptocurrencies.
Fabio de Masi, a lawmaker for the opposition Left Party (Die Linke), commented that Germany’s financial supervisory authority BaFin should analyze how banks will respond to the additional cyber-security risks related to storing cryptocurrencies.
As recently reported by Cryptonews.com, Germany is likely to cement its place as the most crypto-friendly state in the EU, while adoption among the general German public is also set to grow over the next few years. There’s already a significant base of early users from which further adoption could be driven, while the country is estimated to increasingly see the tokenization of fiat currencies and securities.
Meanwhile, also as reported, one German bank has an original way to teach its clients about the world’s most popular cryptocurrency, Bitcoin (BTC). It needs only two old-school things to accomplish this: a pen and a paper.