Germany has just passed a new law which will allow banks to buy, sell, and store cryptocurrency starting on New Years Day. This creates the potential for Germany to become a ‘crypto heaven’, where cryptocurrencies will be widely available to all citizens.
Simultaneously however, this new law requires that pre-existing cryptocurrency exchanges need to have a German legal entity with two directors operating in the country by the end of this year. This only gives overseas cryptocurrency exchanges about a month to do this, or they will be declared illegal.
The next two deadlines for cryptocurrency exchanges are March 31 for signaling their intention to apply for a license to German regulators, and November 31 for applying for the license.
Apparently cryptocurrency exchanges technically have three ways to remain legal in Germany, which are setting up a German company by the end of the year and applying for a license, working with a licensed German cryptocurrency custodian, or working with a license provider for a ‘clever but complex’ solution.
It seems that this law represents a transfer of power in the German crypto space from cryptocurrency exchanges to the banks. Any German bank will now be able to buy, sell, or hold cryptocurrency, meaning they could launch their own crypto exchanges, while regular cryptocurrency exchanges like Binance and Kraken will have to rapidly jump through legal hoops to stay in business. Even if overseas cryptocurrency exchanges manage to get approved in Germany, there is a chance that they will not be able to compete with the banks.
In any case, while this decision may not be positive for overseas cryptocurrency exchanges, it could lead to rapid cryptocurrency adoption in Germany, since cryptocurrency will be easier than ever to use for buying and selling goods and services once its integrated with the banks.