German regulator officially equates cryptocurrencies with financial instruments

Germany's Federal Financial Supervisory Authority (BaFin) on Monday presented guidance, according toto which digital assets are equated with financial instruments, writes Finance Magnates.

According to the definition of a regulator, cryptocurrencies are a “digital embodiment of value”, which has the following characteristics:

• Not issued or guaranteed by any central bank or authority;
• Not always tied to a legally recognized currency;
• Does not have the legal status of currency or money;
• But it is accepted as a means of settlements by individuals or legal entities;
• It may be transmitted, stored or exchanged in electronic form.

As explained in the department, their definition of digitalcurrency is consistent with the definitions of other regulators, including the Financial Action Task Force on Money Laundering (FATF), which served as the basis for the new classification. Prior to this, cryptocurrencies did not fall into any of the generally recognized categories, BaFin clarifies.

At the beginning of the year, Germany updated the rules in the field ofanti-money laundering by establishing mandatory licensing of crypto-custodial companies. Industry participants who already provide such services will not be fined if they declare their readiness to undergo licensing by March 31 and submit an application by November 30.

Also recently, the media reported that over 40 German banks have already shown interest in joining the crypto-custodian business.

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