US crypto custody firm BitGo wins BaFin license in Germany: Report

November 1, 2023 Coin Telegraph

BaFin

BitGo originally announced it was setting up two regulated custodial entities in Germany and Switzerland in February 2020.

Major cryptocurrency custody firm BitGo is reportedly expanding its regulatory compliance in Germany more than three years after launching a dedicated local subsidiary.

BitGo has obtained a cryptocurrency license from the German Federal Financial Supervisory Authority (BaFin), according to a Nov. 1 report by Finance Magnates. The firm has been storing crypto assets like Bitcoin (BTC) for its clients since 2019 under the supervision of BaFin as part of a transitional regime, the report notes.

The German license secures BitGo's presence in the European market and is an important milestone for BitGo, BitGo Europe managing director Dejan Maljevic said.

“BaFin is recognized as one of the world’s key trendsetters in crypto regulation,” Maljevic noted, adding that the license “enables the progress that digital currencies entail while creating a secure regulatory framework.”

BitGo and BaFin have not yet responded to Cointelegraph’s request for comment.

Headquartered in Palo Alto, California, BitGo originally set up two regulated custodial entities in Germany and Switzerland in February 2020. BitGo’s German subsidiary, BitGo Deutschland GmbH, immediately started providing custody services in Germany and was expected to apply for regulatory approval in November 2020.

BitGo then secured a New York Trust license in March 2021, which allowed the firm to operate as an independent custodian in the state.

The news comes shortly after BitGo raised $100 million in a Series C financing round in August 2023, bringing the company’s valuation to $1.75 billion. Backed by major investment firms like Goldman Sachs and Galaxy, BitGo reportedly initiated discussions regarding at least two prospective deals using the new funding.

BitGo’s regulatory milestone in Germany is another sign of growing cryptocurrency adoption in the country. According to an October 2023 report by Chainalysis, Germany is the second largest cryptocurrency economy in the Central, Northern and Western Europe region after the United Kingdom.

German regulator raised concerns about Binance CEO prior to license application withdrawal: Report

July 28, 2023 Coin Telegraph

BaFin

BaFin reportedly advised Binance that CEO Changpeng Zhao wouldn’t pass a “fit and proper” test as part of the financial watchdog’s licensing regime.

The German Federal Financial Supervisory Authority, or BaFin, reportedly advised crypto exchange Binance to withdraw its licensing application based on concerns with CEO Changpeng Zhao (CZ) and the firm’s structuring.

According to a July 28 report from The Wall Street Journal, BaFin advised Binance that Zhao may not have passed a “fit and proper” test under the financial watchdog’s regulatory guidelines. The regulator’s guidelines for a license application state managing directors — in this case referring to CZ — must “have the required professional qualification and be of good repute to manage an institution and must dedicate sufficient time to performing their functions.”

BaFin also reportedly told Binance the company’s structure hindered regulatory supervision. Binance announced on July 26 that it had withdrawn its application in Germany, saying at the time the decision was based in part on focusing the company’s effort to become compliant with the European Union’s Markets in Crypto Assets (MiCA) framework.

A spokesperson for Binance told Cointelegraph The Wall Street Journal story was inaccurate. The exchange did not provide a specific response on the details regarding CZ at the time of publication.

In the United States, Binance faces legal actions brought by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) for allegedly violating securities laws and trading guidelines, respectively. Lawyers for the exchange requested the dismissal of the CFTC lawsuit in a July 27 court filing, claiming the commission had exceeded its authority.

Binance and CZ claim CFTC oversteps jurisdiction in legal filing, call for lawsuit dismissal. https://t.co/49viHYuHGE
— Cointelegraph (@Cointelegraph) July 28, 2023

Though no criminal charges have been filed at the time of publication, reports suggested the U.S. Department of Justice has been investigating Binance for violating U.S. sanctions on Russian entities. Binance chief strategy officer Patrick Hillmann announced on July 6 he would be leaving the firm, reportedly in response to the DoJ probe.

Though it's one of the largest crypto exchanges in the world, Binance has no brick-and-mortar headquarters. Reports have suggested that CZ has had a home in Dubai since 2021, but the SEC had difficulty issuing the CEO a legal summons in June.

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Binance withdraws crypto license application in Germany

July 26, 2023 Coin Telegraph

BaFin

The crypto exchange’s move to withdraw its license in Germany comes amid reports that the exchange faced rejection from regulators.

Binance has withdrawn its cryptocurrency custody license application in Germany. The exchange confirmed its withdrawal to Cointelegraph on July 26, nearly a month after reports of rejections from The German Federal Financial Supervisory Authority (BaFin).

On June 29, BaFin reportedly rejected the crypto exchange’s custody license. However, at the time, it was unclear whether the regulator officially denied Binance’s application or if it verbally informed the company. However, Binance has now confirmed that it has formally withdrawn its license application.

A spokesperson from Binance told Cointelegraph that it intends to re-apply for a license in Germany, with changes to its application reflecting the changes in the regulatory environment:

“Binance confirms that it has proactively withdrawn its BaFin application. The situation, both in the global market and regulation, has changed significantly. Binance still intends to apply for appropriate licensing in Germany, but it is essential that our submission accurately reflects these changes.“

Binance CEO Changpeng Zhao said it would focus on becoming compliant with the European Union’s Markets in Crypto-Assets (MiCA) regulations to offer its services in European countries. However, its European expansion plans have taken a setback amid its regulatory troubles in the United States.

The crypto exchange is facing multiple investigations in the U.S. from financial regulators. The crypto exchange is also under investigation in France since early 2022.

Before its withdrawal from Germany, the crypto exchange also exited the Dutch market after failing to secure a virtual asset service provider license from regulators in the country. The crypto exchange also applied to wind down its services in the United Kingdom and Cyprus.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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German regulator reportedly rejects Binance’s crypto custody license demand

June 29, 2023 Coin Telegraph

BaFin

Binance’s regulatory trouble continues to mount as the exchange faced pushback in Europe after the US.

The Federal Financial Supervisory Authority (BaFin), the German financial regulator has reportedly rejected Binance’s crypto custody license application.

The news was first reported by Forward Finance citing people familiar with the matter. Later Cointelegraph reached out to Binance to confirm the same and a spokesperson from the firm said that they are “unable to share details of conversations with regulators,” while adding:

“We continue to work to comply with BaFin‘s requirements. As expected, this is a detailed and ongoing process. We are confident that we have the right team and measures in place to continue our discussions with regulators in Germany.”

Based on the comments from Binance and the exclusive report, it is unclear whether BaFin has officially rejected Binance’s bid to acquire the license or verbally informed of the same and the exchange may withdraw the license in the near future.

The reported denial of a custody license hinders Binance’s advertising plans in Germany. As per law, only licensed firms can advertise in the country. However, Binance still remains a large trading platform with a reported 2 million customers.

Binance’s struggle with regulators continues to mount as the exchange finds itself in regulatory soup quite similar to 2021 when the exchange faced regulatory warnings from more than half a dozen countries.

After its recent regulatory troubles in the United States, Binance's CEO has proclaimed its focus on the European market and become compliant with the Market’s Crypto Assets (MiCA) regulations. However, just like the U.S., the crypto exchange has faced regulatory pushback in many European countries as well.

A recent report revealed that the exchange has been under investigation in France since early 2022 on “aggravated money laundering” charges. The exchange had to recently exit the Dutch market after failing to secure a virtual asset service provider license from regulators in the Netherlands. The crypto exchange also applied to wind down its services in the United Kingdom and Cyprus.

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Deutsche Bank reportedly applies for digital asset custody license from BaFin

June 20, 2023 Coin Telegraph

BaFin

Germany’s banking industry is slowly warming up to the crypto sector, with multiple partnerships and crypto services launching in 2023 after a long, cautious approach.

Germany’s largest banking institution, Deutsche Bank, has reportedly applied for a digital asset custody license to the country’s financial regulator, the Federal Financial Supervisory Authority, or BaFin, in a bid to expand its revenue streams, Bloomberg reported.

This comes after a similar shift from the bank’s investment arm, DWS Group, and aims to expand on digital asset custody services, including cryptocurrencies. DWS Group had previously indicated an interest in investing in two German crypto firms. Companies negotiating with DWS Group included Deutsche Digital Assets, a crypto exchange-traded products provider, and market maker Tradias.

The banking giant’s corporate bank division first revealed plans to offer digital asset-related services in 2020 but hadn't announced a timeline for the introduction of the services. Deutsche Bank’s commercial banking unit head David Lynne announced on June 20 that the lender is building its “digital assets and custody business,” and that it has applied for a license with the country’s financial regulator, according to Bloomberg.

While Deutsche Bank has been critical of Bitcoin (BTC) and the crypto market’s volatility over the past few years, its tone toward the industry has altered in 2023. In February this year, Deutsche Bank Singapore, in partnership with Memento Blockchain, successfully completed trials for a tokenized investment platform called DAMA (Digital Assets Management Access).

The digital asset fund was created with its own soulbound token and launched a direct fiat-to-digital on-ramp for users.

Separately, German securities processor Deutsche WertpapierService Bank (Dwpbank) also created a Bitcoin-focused platform, wpNex, for retail customers. The new platform offers crypto accounts alongside bank clients' other accounts without requiring them to do any additional Know Your Customer processes.

Germany’s banking institutions had kept a safe distance from the crypto industry citing its volatile nature and unpredictability, however, that stance appears to be changing in 2023 as major baking institutions continue to explore the potential of adding digital asset-centered services for clients.

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German Stock Exchange Boerse Stuttgart to Provide Crypto Custody Through Licensed Subsidiary

April 2, 2023 Bitcoin.com

Boerse Stuttgart Digital subsidiary receives final approval for crypto custody

March 30, 2023 Coin Telegraph

BaFin

With the licensing of the German exchange’s blocknox service, it now offers fully regulated brokerage, trading, and custody.

Boerse Stuttgart Digital, the digital asset brand of the Boerse Stuttgart exchange group, announced March 30 that its blocknox service has received final licensing from the German Federal Financial Supervisory Authority (BaFin) to operate as a crypto custodian. Boerse Stuttgart Group now offers fully regulated brokerage, trading, and custody of digital assets, it said.

Its final licensing makes Boerse Stuttgart Digital the first “established market participant […] Licensed to hold cryptocurrencies in custody without any acquisitions,” Boerse Stuttgart Group CEO Matthias Voelkel said. Boerse Stuttgart Digital said European banks, brokers, asset managers and family offices could incorporate its services into their own offerings. It operates exchanges in Germany, Sweden and Switzerland and has an office in Ljubljana, Slovenia, as well.

Bitcoin Group SE, operator of the German bitcoin.de crypto trading platform, acquired Bankhaus von der Heydt, which was licensed for crypto custody, in December. German asset manager DZ Bank partnered with Swiss Metaco to offer crypto services, including custody, in February.

Ritterschlag für die @bsdex_official: Sie bekommt die offizielle #BaFin-Lizenz für die Verwahrung von #Kryptowährungen.https://t.co/MV8vUicatH
— BTC-ECHO (@btcecho) March 30, 2023

Boerse Stuttgart Digital has been providing custody services through blocknox under a provisional license since crypto custody regulations were introduced in Germany on Jan. 1, 2020. It had begun offering trading services to German residents in the prior month and introduced a trading app in 2021. Boerse Stuttgart Digital received its final custody licensing ahead of several other contenders, including Binance.

Global exchange group Nasdaq announced plans on March 24 to set up a limited-purpose trust company to offer crypto custody services under the supervision of the New York Department of Financial Services. This comes after the United States Securities and Exchange Commission moved to impose new rules making it harder for cryptocurrency exchanges to custody crypto by expanding rules originally formulated in 2009.

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German regulator BaFin suggests a ‘case-by-case’ approach for NFTs

March 9, 2023 Coin Telegraph

BaFin

Given the difficulties with classification, BaFin highlights the freedom of nonfungible tokens from licensing demands.

Federal Financial Supervisory Authority of Germany (BaFin) is not ready to classify nonfungible tokens (NFTs) as securities yet. The Agency suggests classifying the NFTs on a case-by-case basis.

On March 8, the BaFin journal published an explanatory note considering NFTs and their legal classification. At this point, the regulators don’t see how NFTs correspond to the criteria of tradeability and standardization, which define securities. However, in the future, BaFin may consider NFTs as securities. For example, if 1,000 NFTs embody the same repayment and interest claims.

According to another reservation, if an NFT contains documentation of exploitation rights or ownership, such as a promise of distribution, it could be considered an investment.

The agency recommends a case-by-case approach to the classification of NFTs when it comes to their status as a “crypto asset.” But, according to BaFin, the chance that NFT will represent a “crypto asset” is even tinier than with the investment classification, given the lack of immediate exchangeability. And a lack of standardization also spares NFTs off the “e-money” status.

Given the difficulties with classification, BaFin doesn’t expect the NFTs to comply with the licensing requirements of the Payment Services Supervision Act. And, with the exception of non-fungibles, which would fall under the financial instrument category, NFTs by now are also free of BaFin’s Anti-Money Laundering (AML) supervision. With an exception for those NFTs, which still might be considered “crypto assets” on a separate occasion.

According to the metaverse platform Metajuice, almost three out of four of the NFT collectors on its platform purchase NFTs for status, uniqueness and aesthetics. And only 13% percent of the survey participants said that they are buying NFTs to resell them in the future.

Time for Serious Global Crypto Regulation, Germany Says

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Austrian Crypto Exchange Bitpanda Secures Trading License From Germany’s BaFin

November 23, 2022 Bitcoin.com

BaFin

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