On Monday, the German Federal Financial Supervisory Authority (BaFin) published regulatory guidelines to classify digital assets, including virtual currencies, as financial instruments.
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According to the financial regulator, virtual currency is "a digital representation of value, which is not issued or guaranteed by any central bank or public institution, is not necessarily linked to the currency required by law, and does not have a currency or money Legal status. But regarded as a medium of exchange by natural or legal persons, which can be transmitted, stored and traded electronically. "
The regulator also clarified that multiple entities, including the Financial Action Task Force (FATF), have overlapping definitions of cryptocurrencies, which form the basis of their classification.
The guide also states that the broad definition of cryptocurrencies is because digital assets that were not previously accounting units are not part of any previous asset classification.
Clarification of cryptocurrency regulations
Prior to this, BaFin updated its existing anti-money laundering (AML) laws, requiring companies that provide cryptocurrency custody to obtain operating licenses. It also states that it will not penalize any unlicensed entity that already provides such services. These companies need only indicate that they intend to obtain such a license by March 31 and apply for a license by November 30.
According to local reports, more than 40 German banks are now seeking BaFin's approval to provide digital asset custody services in the country.
BaFin said: "According to the wording of the regulation, it is not necessary for related companies to simultaneously store, manage and protect encrypted assets or private encryption keys used to hold, store or transmit. (Translated from German)
"The purpose of this provision is that escrow means taking care of crypto assets as a third-party service. This mainly includes service providers who store their crypto assets in a collective list, and the clients themselves do not know what these assets are Encryption key used. "