Understanding the regulatory landscape for crypto-assets in Germany and the EU
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Loading... - Debora Costa
- 01 Nov 2022
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Currently, we can read many summaries and briefings on the new Market in Crypto Assets Regulation (“MiCAR”) everywhere. For sure, MiCAR has the potential to give the EU crypto market a huge push forward. From what we can see so far, regulation for new business models especially in the Fintech market is not as bad as everyone supposed before.
We all can remember the early days of bitcoin, aiming for a non-regulated currency, and I still hear the voices saying regulation of cryptos is killing the whole idea of the crypto market. But this does not hold true. Germany has already made such a push forward by integrating a regulation and license on crypto custody business and crypto registrants. Additionally, there are clear guidelines on the classification of the different types of crypto assets and their respective regulation. So far, we have seen a very positive response to regulation in Germany.
Investors appreciate the security and clear legal requirements as well as the existing supervision. We see Fintechs aiming for German regulation and license in order to be able to give the signal to the market, investors as well as (potential) customers: we adhere to certain predefined standards, have a functioning risk and compliance system, stable and audited financing and have sufficient experience to run this business.
Like a kind of seal of quality. This is very well received in the market, because ultimately cryptos investments are also associated with risks as any other investment product, which should be hedged according to their individual structure.
German crypto regulation
So, what is the current regulation for crypto in Germany about? German regulation classifies crypto assets in (1) Currency Token (also Payment Token or Exchange Token) such as Bitcoin, Ethereum etc., having a payment or exchange function, (2) Security Token (also Equity Token or Investment Token), which are similar to securities, typically embodying membership or property rights, (3) Utility Token (fungible or non-fungible) as kind of digital voucher, giving an access key for goods and services of the issuer or a third party and (4) Hybrid Token, combining characteristics of the aforementioned basic forms. Decisive for classification of hybrid crypto token is the main characteristic of the respective crypto. Read More...
