40 German Banks Filed For Offering Crypto Custody

German government officials confirmed that several banks have filed a request to start crypto custody business.

According to the February 7 report published by local news outlet Handelsblatt, the Federal Financial Supervisory Authority (BaFin) has received more than 40 applications from German banks and other entities interested in introducing crypto custody services.

Germany’s revised Money Laundering Act allows banks and other national financial institutions to provide and manage traditional securities, such as stocks and bonds, alongside digital assets, such as Bitcoin (BTC), Ether (ETH) and XRP.

Throughout past years digital currencies have gained popularity. As the market capitalization of cryptocurrencies continues to grow, getting to $288.3 billion, BaFin is concerned about challenges posed by anonymity and usage of the nascent assets for financing crime and terrorism as well as for money laundering. The regulator is warning companies that, according to the new laws, businesses are required to obtain an operational license if they want to provide custody services.

German authorities created the new regulations after the Fifth Anti-Money Laundering Directive (5AMLD) was introduced by the European Union. 5AMLD requires crypto companies to align their operations with revised KYC and AML regulations.

FDP-Bundestagsabgeordnete Frank Schäffler told Handelsblatt:

“The market is growing faster than the Federal Ministry of Finance has predicted. That is both a blessing and a curse. The high demand for crypto custody licenses shows that companies are increasingly adopting blockchain technology, and this is also the result of the new legislation.”

BaFin has established a November 2020 deadline for such companies to introduce compliance procedures for storing crypto assets or conducting any other kind of business related to digital assets.