The Financial Supervisory Authority (BaFin) of Germany has eased the licensing process for crypto custodians that work from outside the country. On January 1st, the regulators issued its latest guidance, according to which crypto custodians operating in Germany without a license would not be penalized. Instead, such firms would come within similar protection which other German-based crypto custody companies possessed according to the new law, which came into effect on 31st January.
This signified the firms should state their purpose to apply for a license by 31st March, after which, they could successfully apply for it by 30th November. A partner at Eversheds Sutherland Germany, Carola Rathke, stated they were having such grandfathering mechanism because no firm was capable enough to apply for the license immediately.
Earlier this year, Bafin provided an application form to crypto service providers which these firms should submit by 20th November. Rathke added that crypto custody firms should plan before applying for the license by November’s end.
The new law came in response to EU’s AMLD5, which were made to ensure that cryptocurrency companies comply with the AML and KYC procedures. The industry was compliant towards all the guidances Bafin released over the past several months.
Distributed Ledger Consulting Group’s head, Sven Hildebrandt, commented the regulatory authority first makes law and then discovers it wasn’t a wise decision. He added when a law gets passed; regulators start providing administrative policies. His firm was now trying to receive BaFin’s approval so that it could act as a compliance arm of firms that were not able to apply for the license by themselves.