Germany’s financial watchdog has approved a crypto custody business license for Coinbase, enabling the leading exchange to continue activities in the German market. The Federal Financial Supervisory Authority(BaFin) announced the news on Monday.
According to the press release issued by BaFin, Coinbase is the first crypto exchange to receive a license to operate as a custodian for digital assets. Due to the absence of a pre-existing framework of rules, the regulator will be forming an interdisciplinary, cross-divisional, and cross-departmental team to deal with the complex issues relating to the crypto custody business.
Germany’s parliament -- the Bundestag -- passed legislation in November 2019, which made it mandatory for firms' custody of crypto in the country to obtain BaFin’s approval. The law went into effect in January 2020 but companies that were already operating in the sector were given a one-year transition period to announce their intent and apply for the license.
Carola Rathke, a partner at Eversheds Sutherland, a law firm that advised Coinbase Germany (GmbH) on its license application, stated that the company had originally filed for approval in the spring of 2020.
There are many other applicants for the license whose approval has made it to the late stage of the review process. Rathke believes that BaFin will deliver decisions on these applications in the coming months. The regulator has not fixed a deadline for responding to queries and may require applicants to present additional documents or answer questions with time.
Coinbase made history in April when it became the first crypto firm to go public by selling its shares on the Nasdaq exchange. Since its listing, the company stock -- COIN -- has depreciated from its initial price of $250. At the time of writing, COIN is trading at $239.49, which is almost 30% lower than its original value.