Germany’s Federal Financial Supervisory Authority (BaFin) has received 40 applications from banks who want to become licensed crypto custodians, following a law change which took effect in January.

Previously German banks were not allowed to self-custody cryptocurrency, rather they had to use external cryptocurrency custodians or dedicated subsidiaries. The Association of German Banks argued that banks have sufficient experience and safeguards in place to protect client assets, and ultimately this argument was successful.

Now German banks can become officially regulated crypto custodians, streamlining their crypto businesses, and lowering the barrier of entry for banks to participate in the crypto space.

Clearly, this law change will help crypto activity and adoption proliferate in Germany, since banks will now be able to offer crypto wallet and exchange services to customers. Indeed, some say Germany will become a “crypto heaven”.

An important piece of background information is that negative interest rates are proliferating across Germany, meaning that customers who hold fiat in the bank constantly lose money. Therefore, it is no surprise that banks and consumers are demanding cryptocurrency in Germany, since cryptocurrency deposits are not subject to negative interest rates. Further, Bitcoin (BTC) has gained roughly 40% this year so far, unlike the Euro which is constantly losing value long term.