New German Money Laundering Law for Cryptocurrency
On November 29th, Kryptowahrungen reported that a new bill that was passed by the Bundestag in German would enable financial institutions to virtually offer online banking and classic securities, including bonds and cryptocurrencies as from January 1st, 2020.
The new law, which was passed by the German Federal Parliament (Bundestag) and the German Federal Council, is the planned bill for implementing the Fourth EU Money Laundering Directive. It is expected to open a whole business avenue for German banks, which are currently not directly offering virtual assets to their customers.
The bill proposes that the separation bid present in the first version be deleted to allow the sale and custody of Bitcoin and other cryptocurrencies. The law also accommodates further relief, such as extended license application deadlines.
New German Regulation Pushes for Crypto Values
Crypto values define a concept to first appear in German law. It refers to the digital representations of a value that is accepted as a means of payment, exchange, or investor purpose but is not issued by any public agency or central bank.
The new regulation will enable investors to use domestic banks, rather than foreign ones to invest in crypto values.
The new development has stirred a positive reaction from the financial institutions’ industry representatives. Head of a consultant from Distributed Ledger Consulting (DLC) firm, Sven Hildebrandt stated that Germany is on the way to becoming a haven for cryptocurrency:
“The German legislator is playing a pioneering role in the regulation of cryptocurrency.”
The German banking association BdB also welcomed the new law and stated it could be very effective to the prevention of money laundering and terrorist financing:
“Credit institutions are experienced in the safekeeping of client assets and in risk management, are committed to investor protection, and have always been controlled by the financial supervision.”
Critics Warn Of the Emergence of Aggressive Sales Targeting Consumers
The Financial Expert from the consumer center in Baden- Wuerttemberg Niels Nauhauser, feared that customers are receiving aggressive targeting from the banks. He added that banks would sell different financial products if the commission is right and:
“If they are allowed to sell cryptocurrency and keep them for a fee, they run the risk of turning their assets at the risk of a total loss to their clients, without them knowing what they are getting into.”
Banks were only able to distribute through special bonds, and they were required by law to inform their customers about costs and investor information in advance. The new direct sale of XRP, Bitcoin and other cryptocurrencies waivers the need for banks to inform their customers and investors of the potential risk of investments.
New Legislation Boosts Mainstream Adoption of Cryptocurrency
The new legislation makes Germany a key player in the development of the crypto-industry and the adoption of blockchain technologies. A report by UK financial Conduct Authority showed that more than three-quarters of the surveyed Europeans did not know what a cryptocurrency is, with only 3% ever having bought digital assets.
The legislation will be a boost to the awareness and adoption of cryptocurrency in Germany as it contains significant legislation and gives financial institutions precise guidelines for crypto-transactions.
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